Shareholders of Palantir Technologies (NASDAQ: PLTR) just had a fantastic year. The stock gained 340% in 2024, making it the best-performing component of the S&P 500 (SNPINDEX: ^GSPC). That may seem like a bullish signal, but the Wall Street analysts covering the data analytics company are surprisingly (and overwhelmingly) bearish on it.
In fact, only six stocks in the S&P 500 have a higher percentage of sell ratings than Palantir, and the median price target of $39 per share implies a 45% downside from its current price of $71. Note that median refers to the middle value, not the average value. So half of the analysts following Palantir expect the stock to fall by more than 45% in the next 12 months.
What makes that especially surprising is that Palantir has already fallen by 16% from its record high in recent weeks. Here’s what investors should know.
Palantir is a data analytics software company. Its core products, Foundry and Gotham, help businesses integrate complex information, build machine learning models, and query data. Its artificial intelligence platform, AIP, adds support for large language models to Foundry and Gotham, letting clients apply generative AI to their operations.
The company has received glowing praise from certain industry analysts. For instance, Forrester Research last year recognized it as a leader in AI/machine learning platforms, awarding AIP a higher score for current capabilities than any other product on the market, including Alphabet‘s Vertex AI. “Palantir is quietly becoming one of the largest players in this market,” its analysts wrote.
Similarly, Dresner Advisory Services listed Palantir as one of two top-ranked vendors in its 2024 market study on artificial intelligence, data science, and machine learning software. In that context, the business has compelling growth prospects. The International Data Corporation estimates that AI platform sales will increase at an annualized rate of 41% through 2028.
Palantir is executing on that opportunity. The company beat Wall Street’s high expectations on the top and bottom lines in the third quarter. Its customer count increased by 39% to 629, and its average existing customer spent 18% more than in the prior-year period. Revenue increased by 30% year over year to $726 million, its fifth consecutive sequential acceleration, and non-GAAP earnings increased 43% to $0.10 per diluted share.
“The release of our newest platform, AIP, has transformed our business,” wrote CEO Alex Karp in his latest shareholder letter. “The growth of our business is accelerating, and our financial performance is exceeding expectations as we meet an unwavering demand for the most advanced artificial intelligence technologies from our U.S. government and commercial customers.”
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