Palantir Tech’s $140 billion market cap is driven by Trump’s victory and higher hopes for defense spending – is the stock overvalued?
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.
Palantir Technologies Inc (NYSE:PLTR) has witnessed a major increase in its market value, generating over $23 billion since Donald Trump’s victory in the 2024 presidential election.
Investors expect higher federal spending on national security, immigration and space exploration. The company’s shares have nearly tripled in the past year, reaching $61 per share and taking its market capitalization to about $140 billion, surpassing the top defense contractor. Lockheed Martin (NYSE:LMT).
Don’t miss:
This growth is fueled by Palantir’s close ties with government agencies and its reputation for providing advanced data analytics tools.
According to the Financial Times, the company’s technology has proven valuable, from supporting military operations to streamlining the distribution of pandemic vaccines.
With increased demand for AI-driven intelligence systems, Palantir’s trajectory under the Trump presidency positions the country as a potential beneficiary of increased defense and space budgets.
Earlier this year, Palantir won a $480 million Pentagon contract to advance Project Maven, a major AI battlefield intelligence initiative.
This is consistent with expectations of broader defense allocations under the Trump administration. Palantir’s participation in projects such as the Starlab commercial space station further underscores its growing influence in space exploration alongside NASA and private companies.
According to the FT report, Palantir’s shares are trading at one of the highest prices in the software sector, reflecting optimism about progress in AI and commercial expansion.
Popular: Arrivald Home’s Private Credit Fund has historically paid an annualized dividend yield of 8.1%*, which provides access to a pool of short-term loans backed by residential real estate with a minimum of $100.
The launch of its AI platform has increased private sector revenues, contributing 35% of the company’s total. Notable contracts with companies like CVS Health and BP have fueled this growth, helping Palantir achieve its first profitable year in 2023 with a net profit of $144 million in the third quarter. Palantir Technologies stock is up 280% this year.
Despite the successes, analysts express concern about Palantir’s high valuation. Top hedge funds including Renaissance Technologies and ARK Investment Management cut their stakes in Palantir in the third quarter, selling more than 3 million shares while retaining significant stakes.
Palantir’s lofty valuation metrics, such as a price-to-earnings ratio of 328.85, are raising skepticism among investors who doubt Palantir’s ability to sustain its AI-powered growth trajectory.
With retail investors owning around 50% of the shares, analysts are highlighting the potential for greater stock volatility, both up and down, driven by changing market sentiment.
CEO Alexander Karp’s recent insider sales of $1.2 billion have raised concerns about internal confidence, despite the company’s robust public story and strong third-quarter results.
CNBC’s Jim Cramer named Palantir one of the ten high-growth stocks of 2024, calling it a speculative but promising investment.
While recognizing Palantir’s substantial market performance, Cramer also noted its high valuation and recommended against immediate purchase.
He emphasized that speculative stocks such as Palantir should be included in portfolios to increase long-term returns when combined with stable investments.
Cramer advocates balancing risk with index funds while keeping an eye on speculative picks for future growth opportunities.
When deciding whether to buy a stock, there are some important fundamentals that investors can consider. One of these factors is turnover growth. Buying a stock is essentially a bet that the company will continue to grow and generate profits in the future.
Palantir Technologies has reported average annual revenue growth of 115.77% over the past five years. .
It is also important to pay attention to valuation when deciding whether to buy a stock. Palantir Technologies has a price-to-earnings ratio of 136.99. This means that investors pay $136.99 for every dollar of expected income in the future. The average forward price-to-earnings ratio of Palantir Technologies’ peers is 51.62.
Other important metrics to look at include a company’s profitability, balance sheet, performance against a benchmark index, and valuation relative to peers. For in-depth analysis tools and key financial data, check out Benzinga PRO.
Also read:
Photo by Cory Doctorow via Flickr
This article Palantir Tech’s $140 billion market cap is driven by Trump’s victory and hopes for higher defense spending – is the stock overvalued? originally appeared on Benzinga.com
