Palantir Soars 319%, But C3.ai Offers Cheaper Investment Option

A recent report highlights Palantir's staggering 319% gains driven by AI demand, but warns of high valuations. In contrast, C3.ai shows strong revenue growth and promising prospects at a less inflated value, making it an enticing alternative for investors.

Date: 14-12-2024

AI Rating: 7

Palantir Technologies has seen remarkable performance in 2024 with a substantial 319% increase in stock value, attributed primarily to its in-demand artificial intelligence (AI) software platform. However, investors should be cautious as the report indicates that Palantir's valuation is extremely high, trading at 67 times sales and 372 times trailing earnings.

This inflated valuation means that the stock must consistently exceed Wall Street's expectations to maintain its rally, posing a challenge given the analysts' median 12-month price target of $38 suggests a potential 48% downside from current prices.

On the other hand, C3.ai is emerging as a compelling alternative with its recent 29% year-over-year revenue growth, significantly surpassing analyst estimates. C3.ai reported revenue of $94.3 million, beating the expected $91 million. Moreover, its losses per share decreased from $0.13 to $0.06, which was also better than the anticipated $0.16 loss.

C3.ai's growth trajectory is promising, as evidenced by a 17% year-over-year revenue increase in the same quarter last year and 21% growth in the first quarter. Additionally, the company has secured a notable number of customer agreements, indicating its competitiveness in the enterprise AI software market.

Furthermore, C3.ai has raised its fiscal 2025 revenue guidance to a midpoint of $388 million, predicting a 25% growth. This improvement in performance and optimistic outlook supports its position as a solid investment choice compared to Palantir's high pricing.

Overall, Palantir's impressive growth also comes with significant risk due to its valuation metrics, whereas C3.ai presents a more reasonably valued growth opportunity which may be appealing to investors seeking exposure in the AI sector.

Stocks: PLTR AI