We recently published a list of 10 AI trending stocks to watch for the rest of 2024. Palantir Technologies (NYSE:PLTR) ranks No. 10 on our list, so it’s worth a deeper look.
Chris Heisey, chief investment officer at Merrill & Bank of America Private Bank, said on CNBC’s latest show that there is “huge momentum” behind the market rally. The analyst said a “wedge” in the market needs to be analyzed to gauge how much momentum is behind the optimism.
“The biggest wedge that existed in the market last year and in 2022 was inflation. That’s starting to go away. The fact is that no one is talking about whether we’re going to see any inflation that we should worry about.”
Heisey said the Fed’s fiscal policy easing and China’s “joining” are two key tailwinds for the market.
In response to a question regarding the hard vs. soft landing debate, analysts believe that between these two outcomes there are many other scenarios to consider, so we should look beyond the two possibilities. He said that.
“We have a lot of ingredients for a soft landing. I’d rather say it’s a mid-cycle slowdown due to easing fiscal conditions, and earnings should actually be revised upwards rather than downwards.” added Heisey.
In this article, we have selected the top 10 trending AI stocks based on the latest news and analyst ratings. For each company, we mentioned the number of hedge fund investors. Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Is Palantir Technologies Inc (NYSE:PLTR) a trending AI stock to watch for the rest of 2024?
Palantir Technologies Inc (NYSE:PLTR)
Number of hedge fund investors: 44
Wedbush’s Dan Ives on Palantir Technologies (NYSE: PLTR)’s multi-year, multi-million dollar extension of its corporate agreement with energy company APA Corporation. (NYSE:PLTR) will continue to expand. Examples of how deal flow and AI can be used:
“Messi at AI Palantir is building a pipeline with many more use cases in the future to address critical problems across industries and power data-driven decision-making with a comprehensive suite of AI/ML. /We believe we are well-positioned to continue to expand our deal flow” solution. ”
Wedbush maintains an Outperform rating on the stock and raised its 12-month price target to $45 from $38.
story continues
“New and existing enterprise and federal customers are excited about our recent check-in as we introduce new and valuable use cases to more organizational customers looking to leverage AI to drive efficiency. We continue to sign up different aspects of the PLTR technology stack based on this,” Ives noted.
Why is Palantir Technologies Inc (NYSE:PLTR) one of the top AI stocks? Its technology actually solves business problems. Palantir’s data technology, Ontology, solves the famous illusion problem in AI systems thanks to the company’s years of experience with military and defense systems. At a customer event earlier this year, Palantir Technologies, Inc. (NYSE: PLTR) talked about how its customers are saving money thanks to its artificial intelligence platform (AIP), which it launched about a year ago. We shared some specifics on how we are able to increase profits.
Airbus accelerated A350 production by 33%, BP reduced cost per barrel by 60%, and Jacobs Connect reduced power usage by 30%. Panasonic reduced waste by 12%, ESI Group sped up ERP harmonization by 70%, and PG&E reduced transformer fires by 65%. Eaton increases productivity by 25% and Tyson Foods achieves $200 million in cost savings.
However, the valuation of Palantir Technologies (NYSE:PLTR) stock is a concern for many.
The company’s stock trades at approximately 21.2 times trailing 12-month sales (NTM). Palantir expects fiscal 2024 sales to increase 24% year over year to $2,746 million, adjusted operating income to $970 million, and profit margins to 35.3%. However, revenue growth is expected to slow over the next two years, with an estimated 22% year-over-year growth rate, potentially reaching approximately $4 billion in revenue by fiscal 2026. If Palantir Technologies (NYSE:PLTR) can improve its margins by 100 basis points, it could generate approximately $1.5 billion in adjusted operating income by FY26 if it earns annual points, with a present value discounted at 8%. That’s $1.3 billion. Applying an S&P 500-like growth rate of 2.5x to 2.75x earnings, Palantir Technologies (NYSE:PLTR) would have a P/E ratio of 46x and a price target of $27, a significant decline from the current stock price of $36. .
Carillon Scout Mid-Cap Fund said the following about Palantir Technologies, Inc. (NYSE:PLTR) in its Q1 2024 investor letter:
Palantir Technologies, Inc. (NYSE:PLTR) was the biggest contributor to earnings during the quarter. Sentiment toward Palantir improved after the company reported better-than-expected commercial customer revenue and free cash flow. U.S. commercial growth was particularly encouraging, as U.S. commercial revenue increased significantly year-over-year in the fourth quarter, and the number of U.S. commercial customers increased by a similar amount. We expect Palantir to become one of the leading artificial intelligence (AI) software providers built on the Foundry and AIP platforms. ”
Overall, Palantir Technologies, Inc. (NYSE:PLTR) ranks No. 10 on Insider Monkey’s list of 10 AI Trending Stocks to Watch for the Rest of 2024. While we recognize the potential of Palantir Technologies, Inc. (NYSE:PLTR), we believe in: AI stocks hold great promise of delivering higher returns in a shorter time frame. If you’re looking for AI stocks that have better prospects than PLTR but trade at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: Analyst sees new $25 billion ‘opportunity’ in NVIDIA and Jim Cramer recommends these stocks.
Disclosure: None. This article was originally published on Insider Monkey.
