10 AI News Investors Should Not Miss

8. Palantir Technologies Inc. (NASDAQ:PLTR)

Number of Hedge Fund Holders: 43

Palantir Technologies Inc. (NASDAQ:PLTR), a leading provider of artificial intelligence systems, has surged more than 300% this year. The stock surge can be largely attributed to its pivotal role in the AI revolution, securing significant government contracts and achieving its first profitable year, which ultimately led to its inclusion in the S&P 500 index. While investors are happy with the rewards they are reaping, some analysts are worried that the stock’s valuation isn’t in line with company fundamentals.

One such analyst is from William Blair, an American multinational investment bank and financial services company. On December 4, William Blair reaffirmed their “Underperform” rating on shares of Palantir Technologies in a research note issued to investors. Analyst Louie DiPalma is still skeptical about Palantir (PLTR) and remains critical of the stock, though he admits he underestimated the impact of factors unrelated to the company’s fundamentals that have driven its valuation higher.

“In our view, market conditions similar to what took place in 2022 could trigger a correction if they were to recur. Palantir shares declined 81% from January 2021 through December 2022 as revenue growth decelerated and there was an increased scrutiny on valuation”.

-William Blaire analyst Louie DiPalma

The bull case for Palantir rests on its artificial intelligence platform (AIP), but DiPalma pointed out that its revenue is still over $700 million below its 2025 target of $4.5 billion. Despite this, Palantir’s $158 billion market cap far exceeds competitors like Snowflake ($60.5 billion) and Databricks ($55 billion), despite that both generate similar or higher revenues with comparable growth. The analyst forecast that Palantir shares could drop by over 20% as part of a “phase-one rerating as the revenue multiples of Palantir and Snowflake converge”.