Palantir Technologies Inc. (NASDAQ:PLTR) has had a terrific year, and it shows no signs of slowing down anytime soon. Here is why investors are so optimistic about the stock:
On November 5, Palantir Technologies Inc. (NASDAQ:PLTR) shares surged 17% after the company raised its annual revenue forecast to between $2.805 billion and $2.809 billion, from the $2.742 billion to $2.750 billion projected earlier. The company raised its revenue forecast for the third time, boosting investor confidence. Palantir’s AI initiatives have further fueled optimism, proving that the value of artificial intelligence goes further than simply building AI large language models.
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The company’s artificial intelligence platform has had massive demand, as well as its technology that is used for testing and debugging code, evaluating AI-related scenarios, and offering government-oriented services such as software to visualize army positions. A significant portion of the company’s revenue comes from US government contracts, witnessing a 40% surge in the third quarter. The company continues to secure government contracts, and it stands to gain from the Republican administration led by Donald Trump, with investors expecting higher federal spending on national security and immigration that would eventually benefit Palantir Technologies Inc. (NASDAQ: PLTR).
Even Jim Cramer attributes Palantir’s momentum to Elon Musk’s influence and speculates that Musk, as part of the proposed Department of Government Efficiency (DOGE), could leverage Palantir to streamline defense spending. Here is what Cramer said on CNBC’s “Squawk On The Street.”
“Palantir is up a lot because I believe Musk is going to turn to them and say, ‘The Defense Department, it’s yours … get rid of all those people”.
Moreover, Palantir’s stock was added to the S&P 500 index in late September, bolstering its visibility and attractiveness to investors. On November 14, the company said it would be moving its stock listing to the Nasdaq, effective November 26. While moving to the Nasdaq doesn’t impact a company’s core fundamentals, it can boost demand from exchange-traded funds (ETFs) that must align their portfolios with index rules. The decision appears aimed at attracting retail investors while solidifying Palantir’s position as a major player in the AI sector, particularly given NASDAQ’s strong association with technology companies.
While we acknowledge the potential of PLTR as an investment, our conviction lies in the belief that some 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.
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