In a year defined by the rapid expansion of AI, data infrastructure provider Palantir (NASDAQ: PLTR) is almost unequivocally held to be the biggest success apart from Nvidia (NASDAQ: NVDA).
For one, it’s managed to secure greater gains than the chipmaker — whereas Nvidia stock is up 188.30% on a year-to-date (YTD) basis, PLTR shares have surged by 301.59% in the same period of time.
Palantir is an unusual case in many respects — but one of the most notable instances of that fact is Wall Street’s approach to the stock. For a long time, PLTR stock was a retail investor favorite — in contrast, hedge funds had little interest in it — and major Wall Street firms were quite bearish on the big data business.
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That has changed significantly following the string of standout quarters that the Alex Karp-led venture has delivered over the course of 2024. Hedge funds and institutions can’t seem to get enough PLTR shares — despite high valuations and risky entry points.
Institutional investors currently hold more than half of Palantir stock
In November, institutional investors held 52.50% of Palantir shares — as of press time, that amount has increased to 54.50%.
It’s apparent that the industry has had a change of heart when it comes to the business — at present, the Street high price target for PLTR stock is an eye-popping $75 — a figure which would represent a 12% upside compared to current prices.
However, that’s not to say that this view is universal — some, like Citadel LLC’s Ken Griffin, are dumping Palantir stock — preferring instead to gain exposure through options plays. Cathie Wood and Ark Invest are also reducing their exposure to PLTR — although their approach is best described as slow and steady.
Valuation still remains a major concern — PLTR stock is currently trading at a trailing price-to-earnings (PE) of 321.75 and a forward PE of 136 — even if the business manages to maintain the impressive growth seen thus far, it’s a risky investment. In tandem with this, insiders have steadily been selling the stock — most notably, CEO Alex Karp has sold more than $2 billion worth of Palantir stock throughout the last three months.
While institutional backing is a strong bullish signal in general, institutions do get it wrong on occasion — and we might be dealing with a wave of FOMO after years of overblown skepticism. In particular, the company could meet the requirements to join the NASDAQ-100 index in the coming weeks — a move that could serve as a catalyst for another price surge.
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