While there are plenty of technological naysayers, it was a bit surprising that none other than AI pioneer Sam Altman would decide to rain on the parade by suggesting that AI had entered a bubble phase earlier this month. Perhaps it was then no coincidence that Palantir Technologies (NASDAQ:PLTR) has been dropping since his comments were reported.
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This is a big change for Palantir, which had been on an all-time bull run. Indeed, PLTR’s share price has surged by over 400% over the last twelve months, driven upwards by a seemingly insatiable appetite for AI and Palantir’s own unique contribution to the revolution. The company has delivered stunning revenue growth over the past few years, and breached the $1 billion mark in Q2.
Palantir continues to attract clients from the public and private sector, and has been raising guidance to boot. The one big criticism which constantly surfaces is the company’s valuation, which has soared far and above its peers. Could this indicate that the company has entered bubble territory?
Not according to investor Amrita Roy, who thinks the PLTR bull story is safe and sound.
“Despite AI bubble fears, I see no imminent risk of a capex cliff; tech fundamentals are stronger than the dot-com era, and AI spending is still ramping up,” explains the 5-star investor.
Her confidence does not come just from Palantir’s performance during its recent quarter, which Roy notes left investors “speechless.” In fact, Roy notes that the AI capex spending spree is going full steam ahead, as the four largest hyperscalers – Microsoft, Alphabet, Amazon, and Meta – are all spending more than even they had initially anticipated.
This is a concrete evidence that the AI race is alive and well, and Palantir is extremely well-placed to take full advantage when it moves into the inference phase, states the investor.
“This is the time when Palantir’s AIP will increasingly become an indispensable layer in the AI operating stack,” emphasizes Roy.
While she admits that the company’s valuation is elevated, Roy also posits that it will remain supported as long as PLTR and the hyperscalers continue to meet investor expectations.
“I will reiterate my ‘buy’ rating on the stock with a price target of $190,” concludes Roy. (To watch Amrita Roy’s track record, click here)
That’s a bit farther along than Wall Street is ready to venture at the moment. With 13 Holds – and 5 Buys and 2 Sells – PLTR has a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $156.78 implies minimal downward movement in the year ahead. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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