We recently published a list of 15 AI Stocks That Skyrocketed in Q4. In this article, we are going to take a look at where Palantir Technologies Inc. (NASDAQ:PLTR) stands against other stocks that skyrocketed in Q4.
AI has been dominating the news, market, and basically almost everything we come across for the last two years, since the launch of ChatGPT. In 2024, AI made significant strides, especially in agentic systems and smaller, more efficient models. In addition to that, advancements in retrieval-augmented generation (a method that combines information retrieval with text generation) improved data accuracy and reduced AI errors, while smaller models became faster and more energy-efficient, making AI more accessible.
However, the year also saw a rise in AI-driven cybercrime, with deepfakes used in scams and election interference. As these risks grew, governments and regulators began to implement measures to control AI’s development and use. However, opinions on the balance between innovation and safety remain divided.
The Next Chapter for AI in 2025
While AI continues to evolve and shows immense long-term potential, it still faces challenges such as data limitations, model reliability, and the need for revenue-generating applications. With the maturity of this technology, it will be crucial to address these obstacles in order to meet investor expectations and unlock its full potential in the coming years.
Julie Biel, chief market strategist and portfolio manager at Kayne Anderson Rudnick, discussed the current state of AI investments in a CNBC interview and noted that while significant capital has been poured into developing the technology, much of it is still at the infrastructure stage. She pointed out that AI’s efficiency improvements are beneficial, but the lack of revenue-generating use cases is preventing broader enthusiasm. Biel also raised concerns about a potential AI bubble, as she mentioned issues such as hallucinations and data limitations that could become a hurdle in short-term progress. Despite the strong long-term outlook, she suggested that investors’ patience may wear thin if immediate returns do not materialize.
In another CNBC interview, Anastasia Amoroso, iCapital chief investment officer, highlighted the continued growth of AI as a major theme in 2024, especially its expansion into AI software and power. She noted that while the last two years focused on semiconductors, this year should focus on AI software monetization and the energy demands of AI infrastructure, like data centers. Amoroso believes that AI will remain a key investment opportunity into 2025 and that the sector’s broadening scope, including AI software and its supporting power needs, presents solid prospects for growth.
Our Methodology
For this article, we listed 15 best-performing stocks from Insider Monkey’s database of AI stocks with at least over 100% share price returns in the fourth quarter of 2024. The stocks are listed in ascending order of their share price performance. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s Q3 database of 900 elite hedge funds.
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 intently typing code into a laptop with multiple screens in an office.
Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 43
Stock Price Performance in Q4 2024: ~103%
Palantir Technologies Inc. (NASDAQ:PLTR) creates software platforms for data integration and analysis and helps users uncover patterns and execute responses to threats. Its products include Palantir Gotham, which helps in counterterrorism efforts, Palantir Foundry helps centralize organizational data, and Palantir Apollo is used for software deployment. The company also offers an AI platform that provides access to large language models to transform structured and unstructured data for organizational use.
Unlike many other stocks on our list of AI stocks that skyrocketed in Q4, Palantir (NASDAQ:PLTR) kept its momentum throughout the year as it gained around 340% in 2024. The surge was owed to its position as a leading AI-focused software company. Its strengths include strong revenue and margin growth. In Q3, Palantir reported non-GAAP EPS of $0.10 and revenue of $725.52 million, a 30% increase year-over-year, beating expectations by $21.83 million. The company closed 104 deals that were over $1 million and grew its customer base by 39% year-over-year.
It also reported a strong cash position with cash, cash equivalents, and short-term U.S. Treasury securities of $4.6 billion and $435 million in adjusted free cash flow, a 60% margin. For Q4, revenue is projected at $767 million – $771 million, above consensus, and adjusted income from operations at $298 million – $302 million. The 2024 outlook includes raised revenue guidance of $2.805 billion – $2.809 billion and free cash flow exceeding $1 billion.
As we discussed in our article, 6 Stocks Jim Cramer Talked About This Week, here is what Mad Money host Jim Cramer said about Palantir Technologies Inc. (NASDAQ:PLTR) in a December episode:
“Then there’s Palantir. Now this enterprise software/defense contractor is a real company. I mean like totally real. It has a tremendous business model. It could change the entire defense department budget. But in some ways, Palantir is a renegade company playing by its own rules… The CEO actually caters not to Wall Street, but to Main Street, individual investors. The difference is that when it comes to enterprise software, you don’t use price-to-earnings models, you use this difficult-to-understand Rule of 40 where you add the revenue growth rate to the EBITDA margin. If the sum is above 40, then you got a winner.
Most companies that are losing money can’t reach that number, but some can if they have incredible revenue growth. Palantir appeared to be losing money hand over fist but it passed the Rule of 40 tests with flying colors. Since then, the growth’s been accelerating rapidly. The profits are exploding. It’s among the fastest growers in the entire industry. Top of the Rule of 40.
… So why didn’t we see it? Because the CEO was too brash and the actual business too opaque? By nature what they do is secretive but there are plenty of renegade traders and investors, see, they saw it. The kind who made money and got out of AMC near the high when the CEO sold. The kind who made 100 or 200 bucks on GameStop. These people bought Palantir on CEO, Alex Karp’s say so. To them, it was worth a lot more than anything else, even as it was worth nothing to the Wall Street analysts who covered it. Now Palantir’s made a major breakout. It is up 340% for the year. Seems obvious in retrospect, but it was anything but at the time.”
Overall, PLTR ranks 15th on our list of stocks that skyrocketed in Q4. While we acknowledge the potential of 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 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.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock
Disclosure: None. This article is originally published at Insider Monkey.