Where Will Palantir Technologies Stock Be in 1 Year?

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It would be an understatement to say that Palantir Technologies (NASDAQ: PLTR) stock has been in fine form on the market in 2024, as shares of the software platform specialist have shot up a stunning 290% so far this year as of this writing.

The past month alone has been a terrific one for Palantir investors as the stock has zoomed 62% since releasing its third-quarter results on Nov. 4. Artificial intelligence (AI) has played a defining role in this red-hot rally as enterprises and governments have been flocking to Palantir to help them integrate generative AI into their operations, helping the company accelerate its growth and build a robust revenue pipeline.

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Wall Street, however, isn’t expecting Palantir stock to sustain its momentum in 2025. Let’s see why.

The 20 analysts covering Palantir have a one-year price target of $38 on the stock. That points toward a 43% drop from current levels. Another thing worth noting is that 35% of the analysts recommend selling Palantir stock. Half of them have a “hold” rating, while only 15% recommend buying it.

Moreover, the Street-high price target of $75 suggests that Palantir stock could jump only 12% from where it is right now in the next year. The valuation is one of the main reasons why analysts aren’t projecting much upside in Palantir stock. After all, Palantir is now trading at a whopping 62 times sales. Its trailing price-to-earnings (P/E) ratio stands at 342. While the forward earnings multiple of 137 points toward an improvement in its bottom line, it is still very rich.

It is worth noting that these multiples are way higher than AI pioneer Nvidia, a company that has been growing at a much faster pace than Palantir. For instance, Nvidia’s revenue in its latest quarter increased an impressive 94% year over year to $35.1 billion. Its earnings, meanwhile, jumped 103% to $0.81 per share.

Palantir, on the other hand, reported a 30% increase in revenue in Q3 to $726 million. The company’s adjusted earnings increased by 43% from the year-ago period to $0.10 per share. Of course, this is not an ideal comparison as Nvidia is primarily a hardware company that’s also finding success in AI software, while Palantir is a pure-play software provider.

However, the fact that Nvidia is growing at a much faster pace despite its bigger size and is trading at a much lower 32 times forward earnings when compared to Palantir makes the former a much more logical AI stock to invest in right now. Moreover, Palantir’s valuation puts it at risk of a major sell-off in case there are any cracks in its growth story, which means that it will have to continue delivering stronger growth quarter after quarter to justify its rich multiples.

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