Palantir's Revenue Growth Sparks Stock Surge Amid Risks

Palantir Technologies stock has surged 360% driven by revenue growth and profitability. Despite this, it's highly valued, prompting caution from investors. The report highlights opportunities in Accenture and AppLovin as more balanced options for AI investment exposure.

Date: 21-02-2025

AI Rating: 7

Earnings Per Share (EPS): Palantir reported that it more than doubled its EPS in 2024, with analysts projecting a 63% growth in 2025. This significant increase in profitability indicates a strong upward trend in earnings, positively affecting investor sentiment.

Revenue Growth: Palantir's revenue grew by 17% in 2023, 29% in 2024, and it's projected to grow by 31% in 2025. Such robust revenue growth is a positive indicator for investors, showcasing the company's strong market position and potential for continued expansion.

Net Income: Palantir turned profitable in 2023, which is critical for investors looking at the company's fundamentals. The recent profit indicates improved operational efficiency and a favorable shift in financial health.

Valuations and Risks: Despite the impressive growth metrics, Palantir's valuation poses risks. With a price-to-earnings ratio of 385 times forward earnings and an enterprise value of approximately 70 times its projected sales for 2025, the stock appears overvalued. Such high valuations may deter conservative investors or prompt volatility, leading to potential stock price adjustments if growth expectations are not met.

In contrast, Accenture, with a more conservative growth rate and lower price-to-earnings ratio of 28, presents a steadier investment option. AppLovin, while previously unprofitable, has shown a strong recovery with a revenue surge of 43% in 2024 and expectations for significant net income growth. This diversifies the opportunities in the AI sector, catering to different investor preferences regarding risk and growth potential.

Stocks: PLTR ACN APP