Palantir Technologies (NYSE:PLTR) shares have continued to rally this month, with Palantir stock recently hitting a 52-week high of nearly $30 per share. Investors continue to pile into the AI software company’s shares in anticipation of strong quarterly results and updates to guidance.
Palantir next reports these figures after the market close on Aug 5. That said, it’s worth noting that valuation concerns with this much-followed growth stock continue to persist. With this, it’s unclear whether shares are in for a correction because of this factor.
A lot hinges on whether investors are looking for reasons to buy, when Palantir’s latest numbers hit the street early next month. Or, if they will look for excuses to sell. Even if PLTR experiences some near-term turbulence, that may not mark the beginning of the end to this AI winner’s hot run.
In fact, according to one sell-side analyst, shares may be poised to hit a new share price milestone between now and next year.
Palantir Stock Still Well-Positioned to Rally
In our last PLTR article, we discussed how shares could continue rallying, even after the Aug. 5 quarterly earnings release. We still believe this to be the case. As noted previously, Palantir has experienced a re-acceleration in both sales growth and customer growth. This likely carried on through the June quarter.
Why? Strong commercial customer growth numbers during Q1 2024 suggest further success during the last quarter with the continued rollout of Palantir’s Artificial Intelligence Platform for business.
Alongside this, the fact that Palantir has also rolled out an AIP platform tailored for its government clients suggests revenue growth for that segment will continue to trend higher as well.
Hence, the company could knock it out of the park once again, paving the way for another Palantir stock rally. Then again, shares could again experience turbulence once the latest round of excitement fades. As mentioned above, valuation worries have not gone away.
Just last week, analysts at Mizuho downgraded PLTR from “neutral” to “underperform.” Per the analysts, Palantir’s valuation is now out of sync with its growth prospects. If other sell-siders follow suit with similar downgrades, shares could experience a modest-to-moderate price correction.
$50 Per Share by 2025?
Although one recent analyst rating suggests potential trouble ahead for Palantir stock, another suggests the very opposite. On July 18, Wedbush’s Dan Ives once again laid out the bull case for this top AI software contender.
The much-followed tech analyst reiterated his “Outperform” rating and $35 per share price target. However, Ives also included in his recent research note a possible scenario where PLTR hits $50 per share within a year.
This scenario entails new enterprise use cases emerging. These in turn will spur a further acceleration in GenAI spending by large companies.
Yes, this is a “best case scenario.” Also, our view on PLTR is cautiously optimistic compared to Ives’ current view.
Still, it’s not far-fetched that Palantir hits such prices over the next twelve months. Even if $50 per share is too lofty of a target, if the growth narrative holds, and Palantir’s sales resurgence continues, who knows?
PLTR could come close by climbing to, say, $40 per share between now and next July. Given how Ives’ $50 scenario represents a nearly 75% move higher, even falling short of this stretch goal price target would still mean significant price appreciation for investors owning the stock today.
The Best Approach With PLTR Today
It’s not just direct factors like the Palantir growth story that could help justify an additional surge higher. There’s one indirect factor in particular that may provide a big boost for shares in the months ahead: expected interest rate cuts from the Federal Reserve.
Such cuts could help to spur bullishness for richly-priced tech stocks. That’s not to say that a “Fed pivot” will enable PLTR to once again attain a triple-digit price-to-earnings ratio.
However, lower interest rates coupled with continued top and bottom-line growth for the company may help drive another year of strong price appreciation.
With this in mind, if you currently hold a Palantir stock position, feel free to let it ride. As for entering or adding a new position, the opportunity to do so on weakness could potentially emerge as well before this next super-surge for shares.
Palantir stock earns a B rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in PLTR. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
