Palantir: A Divided Opinion Among Investors

Palantir Technologies has achieved remarkable stock gains this year and recently earned the prestigious inclusion in the S&P 500. The company's shares have more than doubled in 2023 and were among the market leaders in the last quarter. Naturally, this excellent performance raises curiosity: Is Palantir stock a buy, should it be held, or is it better to sell? This question currently divides investors. While Nvidia is considered a leader in hardware-based artificial intelligence, Palantir is likely to be one of the biggest beneficiaries on the software side. The company has made a name for itself worldwide as a leading provider of analytics, having assisted the U.S. government in counterterrorism and tracking COVID-19 spread, for example. With its new Artificial Intelligence Platform (AIP), Palantir significantly expands its application possibilities and is gaining rapid support from customers in various industries, ranging from energy and healthcare to retail. The growth figures in the U.S. commercial sector are impressive, with Palantir recently posting a 55% increase in revenue. The company’s so-called boot camps seem to play a crucial role here. These five-day workshops introduce potential customers to the application of AI in their operations. Despite the success, Palantir has the enormous opportunity to transition new customers from prototype status to productive operations—a process in which the company proves remarkably smooth. In addition to commercialization, Palantir is attracting further contracts from the U.S. government, which should additionally boost growth. The company recently secured a multimillion-dollar contract over five years to deploy the AI-based Maven Smart System to enhance situational awareness on the battlefield. A potential reason for skepticism arises from the behavior of Palantir executives, who have recently sold large blocks of shares. Founder Peter Thiel and CEO Alex Karp have recorded significant sales in recent months, possibly triggered by the rise in the stock price. This raises questions about the current valuation, which, with a forward price-sales ratio of 26, can be considered extreme. However, if Palantir records consistent revenue growth of up to 40% in the coming years, the stock could indeed justify its valuation and potentially become even more valuable in the future. Until then, the investment remains a bet on the potential of one of the leading AI software providers, comparable to Nvidia’s hardware success story.