Palantir Technologies (PLTR) has seen significant growth in recent months, with its market capitalization surpassing $187 billion. However, many analysts believe the stock has become overvalued, with only three out of 22 Wall Street analysts covering the stock giving it a buy rating.
On the other hand, two companies that are gaining attention for their artificial intelligence (AI) capabilities and potential to outperform Palantir in the long run are Palo Alto Networks (PANW) and Micron Technology (MU).
Palo Alto Networks is well-positioned to capitalize on the growing demand for cloud-based cybersecurity services. As more enterprises shift from on-premise storage and compute to cloud computing, they increase their attack points for cybercriminals. Palo Alto offers security solutions across clients’ networks, including firewalls in hardware and software formats, as well as solutions for cloud and endpoint security.
The company’s machine learning AI efforts have given it a data advantage over its competitors, making its solutions more attractive to new customers. Moreover, Palo Alto has been expanding its offerings through bolt-on acquisitions, creating a virtuous cycle that allows it to gain access to more valuable data than its competitors.
Palo Alto’s shares currently trade for an enterprise-value-to-revenue ratio of 14.6, which is considered fair. Analysts estimate that if the company maintains this multiple, its stock price will climb around 14% by the end of 2025, valuing it at approximately $142 billion.
Micron Technology, on the other hand, is a critical player in the semiconductor industry, supplying memory chips used in AI applications like Nvidia’s GPUs. The company’s data center revenue has grown significantly, with a year-over-year increase of over 400% in its first quarter. Management is optimistic about the potential for AI to transform its business, with HBM chip sales projected to grow from $16 billion in 2024 to $100 billion by 2030.
Micron’s shares currently trade at an enterprise-value-to-revenue ratio of 3.7, which is considered undervalued. Analysts estimate that if the stock expands its multiple to 4 over the next year, Micron would see its stock climb around 50% in value.
Source: https://www.fool.com/investing/2024/12/29/prediction-2-artificial-intelligence-stocks-that