1. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 43
Year-to-Date Performance as of February 17: 57.56%
Palantir Technologies Inc. (NASDAQ:PLTR) develops and deploys software platforms for intelligence agencies and other organizations. It offers Palantir Gotham for counterterrorism analysis, Palantir Foundry for data integration and analysis, Palantir Apollo for software deployment, and Palantir AIP for using large language models.
On February 4, Morgan Stanley raised the company’s target price to $95 from $60 and upgraded it to Equal-weight from Underweight. Citing six straight quarters of accelerating growth driven by US commercial and government contracts, they noted the company’s projected Q1 2025 revenue growth above 30% (vs. mid-20% consensus). Despite the high valuation, the upgrade reflects improving fundamentals and a strong 2025 outlook.
The company’s data platform segment, particularly its AI Platform (AIP) drives its revenue growth. AIP helps clients integrate AI into their operations, creating AI agents that automate tasks. This product has attracted new customers and propelled the company’s stock to new heights. In Q4, its revenue grew 36% year-over-year to $828 million. Palantir Technologies Inc. (NASDAQ:PLTR) projects Q1 2025 revenue of around $860 million (36% growth rate) and $3.75 billion for the full year 2025 (31% growth). Analysts, while praising its execution and market position, also caution about the stock’s high valuation and the potential for a correction. The company’s stock is up nearly 585% since early 2024.
Alger Mid Cap Focus Fund is positive on Palantir Technologies Inc. (NASDAQ:PLTR) due to strong results, the success of its AI platform, and potential government partnerships. Here’s what the fund stated the following regarding the company in its Q4 2024 investor letter:
“Palantir Technologies Inc. (NASDAQ:PLTR) builds advanced platforms for data integration, management, and security, enabling interactive, AI-assisted analysis for its users. Its core offerings include Palantir Gotham, designed for government clients, and Palantir Foundry, tailored for commercial customers. Originally focused on U.S. intelligence agencies, Palantir has expanded into defense contracts with western governments and entered the commercial market in 2016. During the quarter, shares contributed to performance after the company reported better-than-expected fiscal third quarter operating results, along with management raising its full year 2024 revenue guidance. Management noted that the recent launch of its AI platform (AIP), which leverages generative AI to optimize business operations, has driven significant growth and investor interest. Additionally, we believe Palantir could be a key partner for the U.S. government’s new Department of Government Efficiency (DOGE), as its AI-driven platforms are ideally suited to help identify inefficiencies, allocate resources effectively, and achieve cost reductions.”
While we acknowledge the growth potential of Palantir Technologies Inc. (NASDAQ:PLTR), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PLTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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