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Recent performance snapshot
Palantir Technologies (PLTR) has drawn fresh attention after a sustained run in its stock price, with moves over the past week and month prompting investors to reassess how current market pricing aligns with fundamentals.
The stock shows a 2.6% gain over the past day and a 17.4% rise over the past week, with a further 11.5% increase over the past month and a 9.1% gain over the past 3 months.
See our latest analysis for Palantir Technologies.
While the recent 1-week and 1-month share price returns suggest momentum is building again, the year-to-date share price return is down 4.3%, even as the 1-year total shareholder return sits at 21.7% and the 3-year total shareholder return is very large.
If Palantir’s move has you thinking about what else is moving in AI, this is a good moment to widen your search with 60 profitable AI stocks that aren’t just burning cash
So with Palantir showing very large multi year returns, rapid revenue and net income growth, and a share price that still sits below the average analyst target, are you looking at an opportunity or a market that is already pricing in future growth?
Most Popular Narrative: 50.1% Overvalued
According to the most widely followed narrative, Palantir’s fair value of $107.02 sits well below the last close at $160.65. This sets up a sharp valuation gap that centers on how aggressive growth and margin assumptions play out.
Based on a 5-year DCF valuation and very optimistic assumptions, I value Palantir today (Feb 2024) at around $89, while price is above $110.
Revenue growth of approximately 37% per annum, driven by the company’s expanding footprint in commercial and government sectors.
Want to see how this narrative gets to a triple digit fair value with a large gap to today’s price? The core is rapid top line expansion, rising profitability and a premium future earnings multiple that is usually reserved for established software leaders.
Result: Fair Value of $107.02 (OVERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, this story can break if high growth assumptions or premium P/E expectations slip, or if reliance on government and AI demand softens more than bulls expect.
Find out about the key risks to this Palantir Technologies narrative.
Next Steps
With sentiment clearly split between strong past returns and concerns about valuation risk, this is a moment to act promptly and evaluate the numbers yourself using 2 key rewards
