We recently published a list of 10 AI Stocks on Investors’ Radar In January 2025. In this article, we are going to take a look at where Palantir Technologies Inc. (NASDAQ:PLTR) stands against other AI stocks on investors’ radar in January 2025.

Drew Pettit, U.S. equity strategist at Citi Research, said in a latest program on CNBC that he believes the AI growth story is still intact moving ahead in 2025. However, the analyst believes a lot of positive news is already “priced in.” He also mentioned the key areas that can benefit this year.

“I think the fundamental stories, at least for the pick-and-shovels names, continue. But where we think the trade is actually going to broaden out, and honestly, it has since mid-year, is into some of the users of AI. So, think about car companies that do autonomous driving or software companies putting that into their programs themselves, and even to some of the more cyclical names that, on the back end, can get some more productivity gains. So yes, the picks-and-shovels, the enablers of the trade, were attractive for the most part in 2024. We think AI continues to broaden out.”

The analyst said he has done some “reverse DCF work” and believes there are many companies that are mispriced and many that have the good news around them already priced in.

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For this article, we picked 10 AI stocks that analysts are talking about this month. With each company, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Palantir Technologies Inc. (NASDAQ:PLTR)

Number of Hedge Fund Investors: 43

King Lip, BakerAvenue Wealth Management chief strategist, recently said while talking to CNBC that he finds Palantir Technologies Inc. (NASDAQ:PLTR) “interesting” in 2025 despite the company’s high valuation.

“It’s controversial because it sells at a very high multiple, we recognize that, but the company just became profitable just two years ago, but it’s been cash flow positive. We think it’s uniquely positioned in the incoming Administration. Peter Thiel was a founder of Palantir Technologies Inc (NASDAQ:PLTR), obviously a connection with Elon Musk there. And with the DOGE efforts that are coming in to reduce government expenditures we think Palantir Technologies Inc (NASDAQ:PLTR) is really uniquely positioned.”

However, Lip said he’d be hesitant to buy the stock at the current levels.

“We would be hesitant in terms of being buyers today. You know, if it does pull back, say to the mid-60s, it would be a lot more attractive to us. But given how volatile these stocks can trade, we think the opportunity is there for investors to participate in a name that’s going to be, in our view, a big winner going forward.”

What makes Palantir Technologies Inc (NASDAQ:PLTR) one of the top AI stocks? Its technologies are actually solving the problems of businesses. Palantir’s data technology Ontology is solving the famous hallucination problem for AI systems, thanks to the company’s years of experience with military and defense systems. Earlier this year at an event with customers, Palantir Technologies Inc (NASDAQ:PLTR) shared some specifics on how its customers are being able to reduce costs and increase profits due to its artificial intelligence platform (AIP) that was launched about a year ago.

Airbus accelerated A350 production by 33%, BP reduced costs per barrel by 60%, and Jacobs Connect cut power usage by 30%. Panasonic decreased waste by 12%, ESI Group sped up ERP harmonization by 70%, and PG&E reduced transformer ignitions by 65%. Eaton boosted productivity by 25%, while Tyson Foods achieved $200 million in cost savings.

However, revenue growth is expected to slow over the next two years, with estimates suggesting a 22% YoY growth rate, potentially bringing revenues to around $4 billion by fiscal 2026. If Palantir Technologies Inc (NASDAQ:PLTR) can improve margins by 100 basis points annually, it would be able to generate about $1.5 billion in adjusted operating income by FY26, with a present value of $1.3 billion when discounted at 8%. Applying an S&P 500-like growth multiple of 2.5 to 2.75 times earnings, Palantir Technologies Inc (NASDAQ:PLTR) would have a P/E of 46, translating to a price target of $27.

Fidelity Growth Strategies Fund stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its Q3 2024 investor letter:

“Untimely ownership of Palantir Technologies Inc. (NASDAQ:PLTR) (+47%) also hurt the fund’s relative result. This software and services firm, which operates in both government and commercial segments, saw strong growth during the quarter, largely driven by its “AIP” – or Artificial Intelligence Platform – offering. In early August, the company reported Q2 financial results that mostly met somewhat lofty expectations. We established a sizable holding in Palantir Technologies during the quarter, and at quarter end it was the second-largest position and a slight overweight.”

Overall, PLTR ranks 10th on our list of AI stocks on investors’ radar in January 2025. While we acknowledge the potential of PLTR, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PLTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.