Will Palantir crash in 2025?

With actions more than 333% in the last 12 months, Palantir technologies (Nasdaq: PLTR) He has been a mass beneficiary of generative artificial intelligence (AI), which many believe could revolutionize how people use and interact with Big Data. But could the rise of AI become the doom ai? We discuss how issues such as competition and overvaluation could stop the Rally of the Palantir rocket ship in 2025 and beyond.

Palantir specializes in Big Data analysis, which implies sifting through large volumes of information to discover valuable ideas. Founded in 2003, it is an early artificial intelligence company because Big Data Analytics is a precursor to the generative AI behind Large language models (LLMS) as Chatgpt, which exploded on the scene at the end of 2022.

Palantir quickly recognized the value of the generative AI and implemented it in its existing Software as a service (SAAS) Offers. A great example of this is with the military, where management states that its new artificial intelligence (AIP) platform can help operators in the field to identify and go to real -time enemy teams. Government clients are quickly adopting the new Technology for your missions.

In May, the company He was awarded An agreement of $ 480 million to help the Defense Department to develop its intelligent Maven system, an AI platform that integrates several data sources to improve consciousness and decision making of the battlefield. He has also won contracts with the governments of Israel and Ukraine for the use of its army related software services in their respective wars.

The profits of the third quarter of Palantir reveal healthy operational expansion (but not spectacular). Total income grew 30% year after year to $ 726 million, since it closed 104 large offers (those worth more than $ 1 million).

And the company reported Added profits before interest, taxes, depreciation and amortization (Ebitda) of $ 283.6 million. But this figure adds $ 142.4 million in shares -based compensation.

That type of compensation can be a double -edged sword. While it helps young companies to maintain cash reserves and motivate employees by giving them a participation in the company’s success, dilute the ownership of shareholders on the business.

Palantir is currently spending about half of its adjusted Ebitda and 99% of its net income attributable to common shareholders in shares -based compensation, which does not seem an attractive situation for long -term investors.

Nervous investor looking at a table of shares on the computer — Image Source: Getty Images.

In addition, there are also There is no guarantee that the company can maintain or improve its current growth rate. Despite enjoying a significant exaggeration, the company does not seem to have any secret sauce that the rivals cannot replicate.

When it comes to Big Data analysis, Microsoft It offers a similar SAAS platform called Fabric. And it is likely to have access to more advanced LLM models due to its close association with the leader of the Opidai industry. Over time, the competition of other data analysis providers could become a serious threat to Palantir’s growth and profit potential.

The current assessment of Palantir does not seem a price on its possible challenges. With a Price below multiple (p/e) of 164, the actions are valued more than 5.6 times the S&P 500 average of 29. And the action is significantly more expensive than companies related to the highest growth as Nvidiawhich recently quoted for only 33 times the earnings forward despite seeing that their income grows 94% in their most recently reported quarter.

Financial markets can be illogical and speculative, so It is impossible to know How long Palantir will continue to operate at such high levels. That said, The company’s valuation does not seem to have a fundamental basis, which makes the shares seem to have a lower performance in 2025 and beyond.

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Will Ebiefung It has no position in any of the aforementioned actions. Motley Fool has positions and recommends the technologies of Microsoft, Nvidia and Palantir. The Motley Fool recommends the following options: Long January 2026 $ 395 calls in Microsoft and short calls of $ 405 in January 2026 in Microsoft. The fool has a Disclosure policy.

Will Palantir crash in 2025? It was originally published by The Motley Fool