We recently published a list of Top 10 AI Stocks Buzzing on Latest News. In this article, we are going to take a look at where Palantir Technologies Inc (NASDAQ:PLTR) stands against other top AI stocks buzzing on latest news.
Investors are continuing to assess the impact of new LLMs in the AI industry. X. Eyeé, CEO of AI consulting firm Malo Santo and senior policy advisor at the Goldman School of Public Policy at UC Berkeley, said in a recent program on CNBC that the DeepSeek breakthrough in China has changed the dynamics of the AI race. She believes AI development is no longer limited to the companies with the “largest pockets.”
“I mean, the world has long looked to the United States to be the leader in artificial intelligence, but these recent model releases from China have demonstrated its ability to leapfrog and catch up with us tech giants and achieve groundbreaking results without the luxury of advanced hardware, which is ultimately challenging everything that we thought was necessary for innovation in the AI space. See, what DeepSeek represents is that AI innovation isn’t necessarily driven by the companies with the largest pockets or the fanciest hardware, but that collaborative development approaches can actually end up providing market-leading technologies.”
For this article, we picked 10 AI stocks making the biggest moves these days. 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).
Analyst Cautions Palantir (PLTR) Investors: ‘Don’t Just Go With The Vibe’
Kim Forrest, Bokeh Capital Partners CIO, cautioned investors about Palantir Technologies Inc (NASDAQ:PLTR) in a latest program on CNBC, saying the company’s stock-based compensation is concerning.
“If you are a retail person, it behooves you to sit down and look at financials. Don’t just go with the story, the vibe, or whatever you want to call it. This was a hallmark of companies that kind of, well, disappointed, we’ll just say, in the dot-com era. Because, again, they were reporting, “If you overlook our stock-based compensation, we’re a really great company.” And I don’t think anybody should do that.”
Forrest believes Palantir Technologies Inc (NASDAQ:PLTR) is more like a services company:
“Firstly, everybody’s saying, “Oh, look at this, this is a new enterprise software company.” But if you look at the financials, they don’t look anything like an enterprise software company—until you take out the cost of shares that they’re giving away to their employees. And then it looks like a software company. So what am I saying by this? There’s a ton of people that make this happen, and that is more of a services company.”
Palantir’s valuation is concerning for many. Its 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 (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 Inc (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 stocks buzzing on latest news. 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 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 thecheapest AI stock.
