Does 1 Top Analyst Know Something About Palantir That the Rest of Wall Street Doesn't?
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You can count the number of S&P 500 stocks that have soared 70% or more year to date on one hand -- and have a couple of fingers left over....
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July 6, 2025
04:14 AM
The Motley Fool
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You can count the number of S&P 500 stocks that have soared 70% or more year to date on one hand -- and have a couple of fingers left over
Artificial intelligence (AI) software company Palantir nologies (PLTR 1. 62%) is a member of the elite group of top performers
Most Wall Street analysts believe Palantir's momentum is to come to a screeching halt
But not Wedbush's Dan Ives
Does this top analyst know something Palantir that the rest of Wall Street doesn't
Pessimism Palantir In July, financial data vider LSEG surveyed 25 analysts who cover Palantir nologies
Six of them rated the stock as a sell or underperform
Another 15 analysts holding Palantir stock
That leaves only four analysts with favorable views of Palantir right now
The picture looks even worse with Wall Street's price targets
The average 12-month price target for Palantir is more than 23% below the current price
RBC Capital predicts that the stock will plunge nearly 70% to $40 per
One reason behind the pessimism Palantir is that some analysts are concerned the company's growth spects
That might seem strange, considering that Palantir expects its revenue to jump roughly 36% in 2025
However, this growth rate is slower than the company's growth in the first quarter of 2025, indicating that Palantir looks for growth to moderate somewhat in the coming quarters
Bably the biggest concern the stock, though, is that its valuation is unjustifiable
Palantir's s trade at 238 times forward earnings
Its price/earnings-to-growth (PEG) ratio, which factors in analysts' earnings growth jections over the next five years, is a sky-high 4. 18, according to LSEG
Wedbush's rosy outlook However, Wedbush has a downright rosy outlook for Palantir
In May, the financial services company maintained its outperform rating for the stock
At the time of that, Wedbush's 12-month price target of $140 for Palantir reflected an upside potential of 13
Since then, though, Palantir's price has risen
I'll be surprised if Wedbush doesn't soon revise its price target upward
Ives, the company's head of nology re, told CNBC in May that he believes Palantir's market cap will reach $1 trillion within the next two to three years
That's more than 3 times the AI software maker's current market cap
Image source: Getty Images
Why is Ives so much more bullish Palantir than most Wall Street analysts
For one thing, he views the company as pretty much in a league of its own in the AI software market
Ives posted on X (formerly Twitter) before Palantir's first-quarter in May that the company is "the Messi of AI" -- a reference to soccer great Lionel Messi
Ives estimates that roughly $2 trillion will be spent on AI software over the next few years, and he thinks Palantir will capture much of this growth
He also told CNBC that anyone who focused too much on valuation in recent years missed out on great investment opportunities, highlighting Nvidia and Tesla as prime examples
The dissonance on Wall Street Palantir is more intense than is normally the case with high-flying growth stocks
Who's right -- Ives or the analysts who expect Palantir's momentum will eventually run out of steam
I lean more toward the Wall Street consensus in this case
If Ives is right Palantir's growth spects, the company very well could achieve a $1 trillion market cap over the next few years
However, we're simply not yet seeing the level of growth that would back up such an optimistic outlook (even though Palantir is admittedly dering impressive growth)
I suspect that Jefferies analyst Brent Thill is correct that even if Palantir manages to grow at 50% annually over the next five years, it will still be the most expensive software stock on the market by 2030
Importantly, Palantir isn't growing anywhere near 50% at this point
Thill told CNBC in May that he doesn't see much institutional interest in Palantir because of its valuation
He thinks retail investors are fueling the stock's continued gains
Again, I think he's on target
Ing the big money is often the smartest move
That could ve to be true with Palantir
Keith Speights has no position in any of the stocks mentioned
The Motley Fool has positions in and recommends Jefferies Financial Group, Nvidia, Palantir nologies, and Tesla
The Motley Fool has a disclosure policy.
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