We recently published a list of Top 10 AI News You Should Pay Attention To. In this article, we are going to take a look at where Palantir Technologies Inc. (NASDAQ:PLTR) stands against other top AI news you should pay attention to.
LinkedIn co-founder Reid Hoffman said in a latest program on CNBC that the DeepSeek breakthrough was not “news” for him and many tech insiders as he believed sooner or later more efficient models would be launched. However, he sees China’s rise in the AI race as surprising:
“I do think that the thing that is news is, well, look, as we’ve been saying, China is in the game. This is actually, in fact, a game-on competition, and it was resoundingly demonstrated that way. There is good, useful work that comes out of it.”
The tech investor believes efficiency will lead to more use cases and usage:
“Say, for example, you can train a model on a thousand GPUs, but you can make it much better on 10,000 GPUs. You will, in a lot of cases, always spend for the 10,000 GPUs or the 100,000 GPUs because if your coding model is even 20% better with that and you think that there are billions of people who could be using and engaging with that around the world, that’s actually worth it at that kind of cost. So, the fact that you’re trying to do efficiency — that’s a good thing. All of the American companies will also get to points where they’re focusing on efficiency. I think there are things that we can learn from some of the stuff the Chinese are doing.”
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For this article, we picked 10 AI stocks currently making moves on the back of the latest news. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Investors: 43
Brent Thill of Jefferies said in a latest program on CNBC that Palantir Technologies Inc. (NASDAQ:PLTR) valuation is too high and at some point in the long term he sees a “trigger” that could cause a selloff around the stock. However, he believes Palantir Technologies Inc. (NASDAQ:PLTR) fundamentals are strong and the company is doing very well compared to peers.
“I mean, we’re at a point right now where the stock is in la-la land on multiple. There’s nothing anywhere remotely close to this. Our team has been advocating there are better ways, safer ways for investors to own these themes around AI, whether it’s security in CrowdStrike or Cloudflare. You look at other stories, but when you start to look at this market cap, it’s the market cap of Palantir Technologies Inc. (NASDAQ:PLTR), Adobe, and Snowflake combined. I mean, again, we’ve never seen a multiple like this. And I can just give you history—when Snowflake, Datadog, and others hit this multiple back during COVID, they didn’t hold that multiple, and it was not a good story on the other side of this mountain. They all imploded,”
Palantir Technologies Inc. (NASDAQ:PLTR) valuation is concerning for many. The company’s revenue growth is expected to slow over the next two years, with estimates suggesting a 22% YoY growth rate, potentially bringing revenues to around $4 billion by fiscal 2026. If Palantir Technologies (NASDAQ:PLTR) can improve margins by 100 basis points annually, it would be able to generate about $1.5 billion in adjusted operating income by FY26, with a present value of $1.3 billion when discounted at 8%. Applying an S&P 500-like growth multiple of 2.5 to 2.75 times earnings, Palantir Technologies (NASDAQ:PLTR) would have a P/E of 46, translating to a price target of $27, significantly down from its current price.
Alger Mid Cap Focus Fund stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) 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.”
Overall, PLTR ranks 9th on our list of top AI news you should pay attention to. While we acknowledge the potential of PLTR, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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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Disclosure: None. This article is originally published at Insider Monkey.
