Palantir Technologies (NYSE:PLTR) has deals with both private businesses and government entities. The company is a redoubtable force in cyber-defense but also enhanced its products/services with artificial intelligence technology. As we look into the new year for long-term picks, Palantir Technologies is a high-conviction tech company and PLTR stock earns a confident “B” grade.
This doesn’t mean you have to go all in on Palantir stock. If you already have a share position, you can certainly choose to hold on to it in 2024. One expert on Wall Street seems to suggest that the share price is due to fall, so we’ll take a look at his argument. At the end of the day, though, there’s no need to worry too much about the future growth prospects of Palantir Technologies.
Don’t Overlook Palantir Technologies’ Progress
It’s no exaggeration to say that Palantir Technologies has come a long way. A few years ago, Palantir couldn’t claim to have four consecutive quarters of GAAP-measured profitability. Now, the company has achieved this milestone.
Granted, Palantir Technologies hasn’t successfully broken into the European cyber-defense market. That’s a tough nut to crack, but be patient. Current challenges don’t mean that Palantir will never become a dominant competitor in Europe.
Meanwhile, Palantir Technologies has made outstanding progress in North America. In the private sector, Palantir renewed its partnership with UniCredit S.p.A for another five years to deploy Palantir’s Foundry operating system.
Furthermore, in Canada, Palantir Technologies is joining forces with the tech team of AI systems provider PlasCred Circular Innovations Inc.
Palantir Technologies is also making strides in the public sector. Notably, Palantir’s one-year continuation of a U.S. Army contract “to continue operating and enhancing the Army Vantage data-driven operations and decision-making platform” is worth $115.04 million.
Is PLTR Stock Overvalued on Perceived AI Hype?
Palantir Technologies emphasized its AI technology integration in 2023, and Palantir stock more than doubled in price. That certainly sounds like a win-win situation for Palantir and the company’s clients and investors.
Not everyone sees the situation this way, though. Surprisingly, Jefferies analyst Brent Thill downgraded PLTR stock from “hold” to “underperform” and lowered his price target on the shares from $18 to $13.
Why would Thill do this? Apparently, he’s concerned about Palantir Technologies having an “unsustainable valuation levels on the back of AI euphoria.” Yet, the Jefferies analyst acknowledges that Palantir still has an AI-technology advantage.
In an interview, Thill expressed consternation about PLTR stock’s “magnitude, the outperformance last year.” Moreover, the analyst emphasized that he doesn’t specifically see anything terribly wrong about Palantir Technologies as a business.
“So it’s a relative call. It’s a call that, hey, stock had a huge move. There’s no… there’s no smoking agenda here in terms of something that’s happening that we detected or feel checks or any of that. That’s not the case,” Thill said.
Prospective investors can certainly choose to wait until the Palantir Technologies share price comes down. Just be aware that Palantir stock could move higher in the coming quarters, and there may be an opportunity cost to sitting on the sidelines.
Palantir Stock: The Decision Is Yours to Make
It’s fine to heed Thill’s warning. Palantir stock might come down, and then it will be possible to buy shares at more favorable price points.
However, you don’t have to worry about perceived AI euphoria if you don’t want to. Palantir Technologies is a well-regarded business with lucrative deals in the public and private sectors.
Plus, the demand for cybersecurity and AI-enhanced products isn’t going away tomorrow or next week. Therefore, PLTR stock is still a good pick and it deserves a confident “B” grade.
On the date of publication, Louis Navellier had a long position in PLTR. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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