Is $PLTR the next $NVIDIA? YOLO Portfolio Update

Palantir could be a multi-bagger. PT of at least $100.

TLDR

Palantir has been on an absolute tear in the last month, with the stock now above $40.

I’ve been a long-term Palantir bull; fortunately, this is a staple of our YOLO portfolio.

• But has Palantir gone too far?

• What’s a realistic price target for PLTR?

• And why exactly is this company so revolutionary?

I’ll discuss below why I believe Palantir today shows similarities with NVIDIA back in 2020. This company is revolutionizing AI, and earnings and revenues could explode higher.

Finally, we will update our YOLO portfolio, where we look for high-risk reward opportunities.

The Palantir Rally

Palantir has rallied over 144% in the last year. In fact, the stock has more than doubled since the August lows.

This rally has come following a long string of new deals and partnerships the company has secured.

New and existing customers across the commercial and federal landscapes continue signing up for multiple aspects of the PLTR tech stack based on our recent checks as the company introduces new valuable use cases to customers with more organizations seeking to drive efficiencies on the back of AI,

Source: Dan Ives, SA Press Release

Explaining Palantir’s unique value proposition here would take a while, but I’ll do a quick summary.

Palantir’s technology, especially its Artificial Intelligence Platform, (AIP) is revolutionizing the world of AI. Thanks to Palantir’s ontology, which helps define real-world assets in the digital space, Palantir is taking AI beyond LLM and solving very real problems and saving companies tons of money.

And as far as I can tell, we're really the only company to figure out how to help our customers get beyond chat, leveraging the investments that we've made in ontology, really harnessing this pattern of implementation where you're taking unstructured inputs and turning them into structured actions and outputs that drive economic value in the enterprise.

Source: Alex Karp, Earnings Call

I have been a long-time Palantir bull, and have pointed out in many previous articles on Seeking Alpha that the company is undergoing a significant transformation, with margin expansion and commercial adoption reaching a turning point.

Check Out More of My Work On Seeking Alpha

The stock has come quite far already, leading many to say the stock is overvalued. But many people would have said the same after NVIDIA’s price tripled back in 2023, and would have missed out on yet another 3x opportunity.

The PLTR and NVDA Comparison

Let’s take a trip down memory lane. The year is 2022, and NVIDIA trades at just over $11 (split-adjusted)

This was back when inflation was soaring and tech was the most hated sector in the market. NVIDIA itself wasn’t doing great, EPS had been falling and the company was barely turning a profit.

And then revenues began to explode higher, margins expanded and the stock began to sky-rocket. Most investors and analysts were caught off guard. NVIDIA reached a PE of over 200, and then something interesting happened.

As earnings doubled every quarter, the PE actually began to fall, leading to further gains in the stock and NVIDIA delivered 10x returns.

And what about Palantir?

Similar to NVIDIA, Palantir experienced a bottom when its EPS were declining, and it wasn’t yet profitable. The PE ratio was volatile, reflecting the company’s negative earnings at one point. However, in recent quarters, the PE ratio has stabilized as both earnings per share (EPS) and the stock price have risen together. 

This pattern suggests that as Palantir’s financials improved, the company’s valuation became more predictable, signalling a shift toward stronger fundamentals, much like NVIDIA's trajectory during its recovery period.

Like with NVIDIA, Palantir now seems way overvalued, trading at a PE of over 80. But analysts may be severely underestimating just how fast Palantir can grow revenues AND earnings.

Palantir possesses the same traits that NVIDIA did back in 2022.

• Unique technology

• Large TAM

• Potential for margin expansion

Palantir Valuation and PT

Currently, this is what analysts are expecting from Palantir, according to data from Seeking Alpha.

We’re looking at double-digit growth all the way to 2030, with Palantir potentially reaching $8 billion by the end of the decade.

This would make sense, if Palantir continued its current trajectory, with a large part of its revenue coming from the government, but this has changed with AIP.

Now, Palantir is tapping straight into a $600 billion market; Enterprise Software.

This is a market dominated by companies like SAP and Microsoft and it encompasses any software application that a company could need. 

The way I see it, Palantir is now set to take a big chunk of this market, if what we are hearing from the first AIP users is indeed true.

If Palantir can take, even just 5% of this market by 2030, we’d be looking at revenues of $50 billion.

But we can be much more conservative, and Palantir would still look massively undervalued.

In this DCF analysis, I have assumed Palantir can reach revenues of $11.5 billion, which would mean less than 3% of the ERP market. 

I have also assumed an aggressive expansion in the margin, which I think makes sense. AIP is ultimately software, and Palantir should be able to achieve similar margins as other software companies.

This takes us to a target price of around $105.

Final Thoughts

This seems like a very realistic target if Paklantir is indeed going to revolutionize enterprise software with AIP.

Like with NVIDIA, I think a lot of analysts are slow to realize this is happening, but with the stock up over 50% in the last month, it seems like some investors are waking up.

I have owned Palantir for a long time in my YOLO portfolio, where I find high-risk/reward opportunities. 

The YOLO portfolio appreciated 14% in September and we have outperformed the S&P since inception.

In the next section, we will review:

• Our latest additions to the YOLO Portfolio

• Why I’m selling one of my Altcoins

• Best stocks to buy right now

• Potential future adds to the portfolio

Thanks for making it this far! If you are still reading this, perhaps I’m doing something right for once.

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