Near $200, might Palantir stock become the next Microsoft?

Palantir Applied sciences (NASDAQ: PLTR) inventory has produced really eye-popping positive aspects since ChatGPT was unleashed in late 2022. We’re speaking a few near-2,500% return!

That really outdoes Nvidia, the kingpin of the entire AI revolution, whose shares are up by 1,000%. I don’t know the way Nvidia shareholders might even put meals on the desk after such a measly return.

A milestone quarter

Palantir was the fourth hottest share on AJ Bell‘s platform over the previous week, simply forward of Nvidia. The main three had been all juicy dividend payers, displaying that this inventory stays extremely widespread with UK retail buyers.

Naturally, a few of this shopping for could have been pushed by hypothesis and FOMO (worry of lacking out). However the numbers Palantir is placing up are undoubtedly very spectacular. Income topped $1bn for the primary time in Q2, properly forward of the $940m anticipated by Wall Road.

Extremely, US income jumped 68% 12 months on 12 months, with US business income practically doubling. And the software program agency closed 157 offers of a minimum of $1m, and over 100 offers price a minimal of $5m.

On the underside line, adjusted earnings per share of $0.16 beat estimates for $0.14.

Trying forward, Palantir additionally boosted its full-year outlook. Administration now expects round $4.1bn in income reasonably than $3.9bn.

Driving a lot of this unbelievable enterprise efficiency is Palantir’s Synthetic Intelligence Platform (AIP). This pulls collectively knowledge from many sources then constructions and readies it for AI fashions to ship actionable insights.

Bullish

On each metric, the corporate is firing on all cylinders. So it’s simple to see why the inventory is totally surging, helped by CEO Alex Karp’s uber-bullish commentary.

The sceptics are admittedly fewer now, having been defanged and bent right into a type of submission. But we see no motive to pause, to relent, right here…We imagine that Palantir will turn out to be the dominant software program firm of the longer term.

Alex Karp

The final time there was a expertise anyplace close to as consequential as AI was the web through the Nineties. Again then, buyers piled into tech shares and despatched them to the moon. Only a few ever recovered when the dot-com bubble burst.

As we all know although, Microsoft was one which did. It went onto turn out to be the dominant software program firm of our age (sound acquainted?).

But it surely’s price remembering that it took 16 years and eight months earlier than Microsoft’s share worth recovered from the dot-com peak in 1999.

In different phrases, it spent a decade and a half within the wilderness, regardless of sturdy enterprise progress.

Echoes of the previous?

Would possibly we see one thing comparable with Palantir? I ask this as a result of its market cap of $445bn places the inventory at 108 instances forecast gross sales.

This appears ridiculous, even when the corporate goes on to beat present progress forecasts.

In fact, I’m not saying Palantir gained’t turn out to be the following Microsoft over the following 20 years. And sure, I’m kicking myself for not investing a few years in the past.

Nonetheless, two issues may be true concurrently. One, the corporate is world-class and goes to dominate the AI software program area for the following decade — and the share is grossly overvalued.

As Palantir inventory heads larger, I feel it dangers turning into the following Microsoft. For this reason I’m preserving it simply on my watchlist for now.