10 Best of Breed Stocks to Buy For The Third Quarter of 2024 According to Bank of America

6. Palantir Technologies Inc (NYSE:PLTR)

Number of Hedge Fund Investors: 45

Palantir is one of the notable AI stocks in BofA’s best of breed stocks list.

Wedbush analyst Dan Ives said in a latest note that Palantir Technologies Inc(NYSE:PLTR) is one of the stocks that can benefit from the “AI party” that is just getting started. Ives counted Palantir Technologies Inc(NYSE:PLTR) among the stocks that will ride the AI wave thanks to their “massive installed bases” in both the enterprise and consumer spaces.

Last month, Wedbush’s Dan Ives said the latest selloff around Palantir Technologies Inc (NYSE:PLTR) was a “golden” buying opportunity.  Ives has an Outperform rating and a $35 price target on Palantir Technologies Inc (NYSE:PLTR). Palantir Technologies Inc (NYSE:PLTR) is trading at a high P/E multiple of 170, which has alarmed many. However, Palantir Technologies Inc (NYSE:PLTR) bulls believe Palantir Technologies Inc’s (NYSE:PLTR) consistent contract wins from the government and AI-related growth catalysts justify this multiple. Analysts are bullish on Palantir Technologies Inc’s (NYSE:PLTR) AI platform (AIP), which helps companies and governments in decision making based on AI technologies. In the first quarter alone, Palantir Technologies Inc (NYSE:PLTR) saw a 16% YoY increase in government contracts. US government revenue jumped 12% year over year.

Palantir Technologies Inc (NYSE:PLTR) has increased its U.S. commercial sector growth outlook to 45% from an initial estimate of 40%. Palantir Technologies Inc (NYSE:PLTR) is expected to report sales growth of 20% next year according to Wall Street estimates. The stock is trading at 54X its 2025 EPS estimate of $0.39, which is justified based on the strong growth trajectory.

Carillon Scout Mid Cap Fund stated the following regarding Palantir Technologies Inc. (NYSE:PLTR) in its first quarter 2024 investor letter:

“The top contributor to return for the quarter was Palantir Technologies Inc. (NYSE:PLTR). Sentiment improved on Palantir after it reported stronger than expected commercial customer revenue and free cash flow. U.S. commercial growth was especially encouraging, as U.S. commercial revenue was up by a large percentage year over year for the fourth quarter and U.S. commercial customer count grew nearly as much. We expect Palantir to become one of the premier artificial intelligence (AI) software providers, built on its Foundry and AIP platforms.”