The holiday season has arrived early for two of this year’s most-watched technology companies: Palantir Technologies (PLTR) and MicroStrategy (MSTR). Both have seen their stock prices soar over 300% and 500%, respectively, this year. The Nasdaq-100 index, which tracks the top 100 non-financial stocks on the Nasdaq Stock Market, has invited both companies to join its ranks as of December 23.
Inclusion in the Nasdaq-100 is a significant achievement for Palantir and MicroStrategy, as it requires funds tracking the index to buy their shares. This is seen as a vote of confidence in the companies’ growth prospects. For investors considering buying either stock ahead of their Nasdaq-100 debut, which one makes more sense?
Palantir’s growth story excels in its software segment. The company has made significant progress in commercial sales, outpacing government revenue growth. In the latest quarter, U.S. commercial revenue rose 54%, while U.S. government revenue advanced 40%. With demand for its Artificial Intelligence Platform (AIP) on the rise, Palantir may be entering an early stage of growth.
However, MicroStrategy’s business model is more volatile, with risk linked to the performance of Bitcoin, which has been a key investment strategy for the company. MicroStrategy has increased debt and plans to sell $21 billion in equity to finance further Bitcoin purchases. In contrast, Palantir operates primarily as a profitable software company, offering growth and stability.
Considering these factors, Palantir appears to be the better buy among the two companies. Its forward PEG ratio is 0.6, indicating relatively reasonable pricing. This contrasts with MicroStrategy’s more expensive valuation, suggesting that Palantir may offer more value for investors seeking growth and minimizing risk.
Source: https://www.fool.com/investing/2024/12/18/better-new-nasdaq-100-buy-palantir-microstrategy