We recently published a list of Insiders are Selling These 10 AI Stocks. Since Palantir Technologies Inc (NYSE:PLTR) ranks 8th on the list, it deserves a deeper look.
Positive sentiment is prevailing in the market after strong bank earnings and increasing hopes of a soft landing. Ryan Detrick, Carson Group chief market strategist, said while talking during a recent program on CNBC that he sees more runway for the current bull market.
“This is a bull market. Now we’re in the third year of a bull market. My friend Sam Stovall said once you get to 65 years old, the odds of getting to 85 are really, really high. Bull markets work that way. Going back 50 years, there’s five other bull markets that made it into their third year, like this one is right now. The worst any of them went was another three years. A five-year total. The average was eight years. I’m not saying we have another six years of a bull market but what we’re saying is this is an economy that keeps surprising to the upside.”
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However, the analyst said large-cap tech stocks are “pricey.” He believes small- and mid-cap stocks are cheap and labeled financials and industrials as fairly valued.
There are some top AI stocks that are seeing insider selling activity. In this article, we take a look at those stocks and analyze their fundamentals and market sentiment. With each company, we have mentioned its hedge fund sentiment. 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).
A software engineer manipulating a vast network of code on virtual monitors.
Palantir Technologies Inc (NYSE:PLTR)
Number of Hedge Fund Investors: 44
On September 24, 2024, Palantir Technologies Inc (NYSE:PLTR) Director Peter Thiel sold 16,178,415 shares at $36.90 per share, reducing his ownership by 16% to 83,283,878 shares. The sale was valued at approximately $597 million. The stock is up 17% since then.
On September 27, 2024, Thiel made another sale, disposing 12,412,322 shares at $36.85 per share, further decreasing his ownership by 15% to 70,871,556 shares. This transaction was valued at roughly $457 million.
What makes Palantir Technologies Inc (NYSE:PLTR) one of the top AI stocks? Its technologies are actually solving the problems of businesses. Palantir’s data technology Ontology is solving the famous hallucination problem for AI systems, thanks to the company’s years of experience with military and defense systems. Earlier this year at an event with customers, Palantir Technologies Inc (NYSE:PLTR) shared some specifics on how its customers are being able to reduce costs and increase profits due to its artificial intelligence platform (AIP) that was launched about a year ago.
Airbus accelerated A350 production by 33%, BP reduced costs per barrel by 60%, and Jacobs Connect cut power usage by 30%. Panasonic decreased waste by 12%, ESI Group sped up ERP harmonization by 70%, and PG&E reduced transformer ignitions by 65%. Eaton boosted productivity by 25%, while Tyson Foods achieved $200 million in cost savings.
However, Palantir Technologies Inc (NYSE:PLTR) stock’s valuation has been a concern for many.
The stock is trading at about 21.2 times the next 12 months (NTM) revenue. For fiscal year 2024, Palantir expects revenue growth of 24% year-over-year (YoY) to $2.746 billion, with an adjusted operating income of $970 million, representing a 35.3% margin. However, 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 Inc (NYSE: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 Inc (NYSE:PLTR) would have a P/E of 46, translating to a price target of $27, significantly down from its current price of $42.
Overall, PLTR ranks 10th on Insider Monkey’s list titled Insiders are Selling These 10 AI Stocks. While we acknowledge the potential of Palantir Technologies Inc (NYSE: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 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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Disclosure: None. This article is originally published at Insider Monkey.
