"One of the most impressive growth stocks in recent years, Palantir ( NASDAQ:PLTR) has also become among the most discussed names in the market. With a market capitalization that's now approaching $500 billion, and some expectations that this stock could be another entrant into the $1 trillion club, growth investors everywhere are cheering CEO Alex Karp and its team on. Well, most investors."
"Given Palantir's astronomical 155% year-to-date return and surge of more than 650% over the past five years, investors have clearly profited from buying this stock and closing their eyes when it comes to the company's valuation multiple. Indeed, for investors who believe that this recent surge in both revenue and profit growth is just the beginning, then there's a solid buying thesis that can be made around why this stock is worth buying here. A confluence of accelerating revenue, earnings and margins over time could mean that Palantir is still undervalued, even at 125-time forward sales."
Palantir's market capitalization is approaching $500 billion with some forecasts envisioning a $1 trillion valuation. The company has delivered 155% year-to-date returns and more than 650% gains over five years. U.S. sales increased 55%, led by 71% commercial growth primarily from AIP, driving substantial ARR expansion. Government contracts represent roughly 55% of revenue and provide steady demand. Continued adoption of Gotham, Foundry, and AIP could accelerate revenue, earnings, and margins, potentially justifying high multiples. Critics, including prominent investors, contend that current fundamentals do not support valuation levels like 125-times forward sales.
Read at 24/7 Wall St.
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