1. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 43
Cramer started his game plan for this week with Palantir Technologies Inc. (NYSE:PLTR) as he discussed:
“Alright, the fireworks start on Monday. Well, of course, we’ll have to worry about the fallout, right,… of the tariffs, but Palantir’s reporting after the close. Now Palantir’s a really odd duck, so we’re gonna spend a second on it. Data-driven consultant that helps everyone from packaged goods companies to the Pentagon to get more out of the resources. Right now, they’re focused on fixing the military procurement system. We give way too much business to a handful of defense contractors and it jacks up the price of all the hardware we, the taxpayers pay for.
Now Palantir’s volatile. Unabashed CEO Alex Karp is a messianic figure to some and a Pied Piper to others. He caters to his retail investor base and the stock’s a levitator. I call it GameStop with a brain. I’ve been saying it’s going to $100 ever since it was in the fifties. Now it’s at $82, shows no sign of letting up. Mark my words, a hundred dollars robust.”
Palantir Technologies Inc. (NYSE:PLTR) is a leading provider of software designed to facilitate complex data integration and decision-making, serving both government and intelligence organizations, along with commercial customers. Headwaters Capital Management stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its Q4 2024 investor letter:
“More specifically for this strategy’s benchmark, the top two performing factors during Q4 for the Russell Mid Cap Index were high beta (+10.1%) and non-earning companies (+8.3%), while high return on equity was one of the worst factors (see appendix). Given the quality focus of this strategy, I am not surprised that the portfolio lagged in this market. It is déjà vu given that the portfolio’s worst quarter of relative performance was Q1 of 2021, which coincided with the top of the last speculative bubble.
Speaking of 2021, I am surprised by the market’s amnesia as it seems to be repeating similar mistakes that were made only a few years ago. The parallels to the 2021 bubble are striking. Palantir Technologies Inc. (NASDAQ:PLTR), the Russell Mid Cap Index’s largest holding and one of the poster children of the 2021 bubble, is a good example. PLTR more than doubled in Q4 entirely driven by multiple expansion, which at the end of the year, surpassed its peak achieved in Q1 2021!
Note the correlation between PLTR’s valuation and the price of bitcoin, which again highlights the broad rotation into speculative assets. Just so readers are clear, PLTR was trading at 51x SALES at the end of 2024. I don’t know much about PLTR, I’m only using this as an example. Paying that kind of multiple generally makes it difficult to achieve strong returns in the future. For example, the last time PLTR traded at this level, the stock returned -68% over the following year. I could choose plenty of additional charts like this (ARK Innovation ETF, fringe AI stocks, quantum computing, etc), but I think readers get the idea that I believe there are pockets of frothiness in the market.”
While we acknowledge the potential of Palantir Technologies Inc. (NYSE:PLTR) as an investment, our conviction lies in the belief that 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.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article was originally published at Insider Monkey.
