Palantir, a leading provider of artificial intelligence software, has seen its stock rise an astonishing 340% in 2024, more than quadrupling its value. The company’s AI platform is experiencing huge growth in the US, with demand driven by governments and commercial sectors.
While Palantir’s AI business shows promise, with revenue rising 30% year over year to $726 million, its stock returns are concerning. Most of the gains come from multiple expansion, a mechanism where investors pay more for the company’s given financials, causing its valuation to rise. This has led to a high valuation of 184 times forward earnings and 63 times sales.
In contrast, AI leader Nvidia trades at similar valuations with lower revenue growth. Palantir’s revenue growth is not on par with Nvidia’s, which rose 320% from the start of 2023 until now. For Palantir to repeat its 2024 performance in 2025, it would need to accelerate its growth rate significantly.
Given the high expectations and low revenue growth, investors should exercise caution when considering Palantir’s stock. The company’s valuation is ripe for a significant pullback unless its growth rate accelerates substantially.
Source: https://www.fool.com/investing/2024/12/08/palantirs-stock-quadrupled-in-2024-can-it-repeat-i