Palantir Stock: Gluttonous Valuations Meet Space Station Aspirations

Palantir Technologies (NYSE:PLTR) has rapidly enhanced its offerings with artificial intelligence. Since AI stocks are red-hot on Wall Street, perhaps traders pushed Palantir stock up a little too far and too fast. Still, we’re assigning the stock a “B” grade as Palantir is a financially solid and innovative AI-tech developer.

You just never know where and how Palantir Technologies might apply its AI tech next. For example, the company is using its AI software to promote better healthcare outcomes. Now, let’s look up to the skies as Palantir’s recent collaboration will show you just how far the company can take its AI-infused advancements.

Palantir Brings AI to Space Stations

We won’t claim that Palantir Technologies is launching its AI software into outer space (yet). However, Palantir is at least bringing its AI technology to space stations.

More precisely, Palantir Technologies is teaming up with space station developer Starlab Space. In this strategic partnership, Palantir will “leverage data modeling through digital twins and AI technologies to enhance Starlab’s operations throughout the enterprise.”

From mission planning to predictive maintenance, Palantir Technologies’ AI-infused products could potentially revolutionize the modern space station as we know it. Moreover, Starlab Space CEO Tim Kopra expects the two companies to “advance the frontiers of space research.”

That’s an ambitious goal, but it’s commendable that Palantir Technologies is apparently making good use of AI. Eventually, Palantir could tap into powerful revenue-generation opportunities in space station technology. So, stay tuned for further developments on this topic.

Analyst Calls Palantir’s Valuation ‘Gluttonous’

Analysts on Wall Street can use colorful adjectives sometimes. In a perfect example of this, Monness, Crespi, Hardt & Co. analyst Brian White recently described Palantir Technologies’ valuation as “gluttonous.” Here’s the full quote:

“After surging 167% in 2023, Palantir’s stock was already rich upon entering 2024 and, with a 49% rally YTD, we believe valuation has now reached a gluttonous extreme.”

Yes, we get it. Palantir Technologies has relatively elevated trailing and forward price-to-earnings ratios. The share price is higher than it was a year and a half ago. We’ll concede this point without argument.

However, just because White downgraded Palantir stock to “sell,” this doesn’t mean investors need to sell their shares immediately. You can choose to hold a few shares if you want to – but we’ll discuss a more specific strategy in a moment.

Let’s not pretend that Palantir Technologies’ market capitalization expansion was completely unjustified. Remember, the company’s revenue grew 17% year over year in 2023’s third quarter.

Then Palantir posted 20% revenue growth in the fourth quarter, followed by 21% revenue growth in 2024’s first quarter.

In other words, Palantir Technologies’ sales-growth rate is growing. Palantir recently celebrated six consecutive quarters of GAAP profitability.

This company’s no slouch or slacker, and the demand for Palantir Technologies’ products is, to use White’s term, “gluttonous.”

Palantir Stock: A ‘Scaling In’ Strategy to Consider

Maybe Palantir Technologies’ valuation still bothers you despite the company’s accelerating revenue growth. If so, then you don’t have to load up heavily on Palantir shares right now.

Instead, you can “scale into” a position. This would mean holding a few Palantir Technologies shares now, and gradually adding to your position if the stock price falls 10%, 20% and 30%.

Thus, investors can be fairly optimistic about Palantir Technologies but also cautious. In the final analysis, Palantir stock deserves a reasonably confident “B” grade and should be appropriate for a gradual scaling-in strategy.

On the date of publication, Louis Navellier had a long position in PLTR. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.