Palantir Technologies has been one of the best performance stocks of the S&P 500 and the NASDAQ-100 during the last year.
Although the enthusiasm for Palantir’s AI opportunities have promoted their actions to new heights, investors should look closely at the company’s valuation trends.
Over the past two years, Artificial intelligence (AI) has focused on the next megatrend. In capital markets, Megacap’s technological stocks have attracted the lion’s part of attention and the drum in relation to the perspectives of the AI.
But some younger players are showing that they can also compete with Big Tech. I can’t think of a better example than this Enterprise software developer Technologies Palant(NASDAQ: PLTR)which has seen its shares increase 361% last year (from May 6).
Although Palantir has become one of the most popular Actions, smart investors wonder if the company’s parabolic earnings in the price of actions can persist. We explore their valuation trends and compare these dynamics to share behaviors around other important historical events in the technology sector. From there, it should be clearer which direction could be directed.
In just one year, Palantir Market Capitalization has gone from $ 46 billion to more than $ 250 million.
From this writing, the company’s Pre-Vendes relationship (P/S) is about 91 years. Looking at this figure is not too much, so let’s consider it in the context of some notable examples of the history of the technology sector.
Image Source: Getty’s pictures.
A couple of months ago, my partner’s partner Sean Williams wrote an amazing article Reference assessment trends during dot-such bubble and the current AI revolution, and later indexed these results against Palantir.
Before dot-com falling relationships over-nouns of hot names such as Cisco and Amazon It reached 40 years. This is similar to what Nvidia It has experienced throughout the AI boom: Its P/s ratio reached a record of 46 a couple of years ago.
Yes, P/S of Palantir is now more than double the fact that some leading technology players have contributed during periods of euphoria in the securities market.
In this lamp, it is clear that the evaluation of Palantir is overwhelmed. But investors still need to consider what happened to the fall of the Dot-com boom and the most recent trends in Ai Arena to better understand where the action can be directed.
From this writing, Cisco, Amazon and Nvidia market in multiple P/s of 4.4, 3.1 and 21.6, respectively. At a high level, I think the historical context here strongly suggests that the multiples of evaluation of palantir could begin to compress significantly.
Although this notion may inspire some panic sales, I would not encourage this emotion to act. The reason I say it is because it is completely reasonable that the multiples of valuation are normalized during the long horizons. As companies mature, so do their valuation rates. That is, as sales and benefits grow over time, also the market value of the company, therefore, the multiples of rating begin to soften.
In addition, just because the multiple ratings begin to compress -it does not necessarily mean that the market value of a company will decrease. Amazon is a much more valuable company today than 26 years ago during the BOOM DOT-COM, when its multiple ones were reached.
Although Cisco’s assessment was never completely recovered, the current company’s current company market lid is even larger than in the mid -2000’s. This emphasizes the idea that the long -term stock (several years or even decades) can lead to higher gains.
In addition, the nvidia market lid is more than double what was two years ago, when its P/S reached around 46 years.
One of the key differences between stirring and the above examples is that I don’t think the AI sector is in a bubble. I think the perspectives of growing growing are now much clearer than those of Cisco or Amazon during the dowry-com era, thanks in large part to increase the demand for AI software. Although this suggests that their long -term perspectives are robust, it would still encourage investors to understand the opportunity cost of investing in the company with a historically high assessment.
Although the story suggests that Palantir could eclipse its current market value of $ 250 million eventually, there is also some tests that suggest that at some point it will negotiate at more reasonable prices for new buyers. For investors who want to build a position now, I think the best strategy to use would be the average cost of the dollar. And I would say that in order to get the most out of the investment, they should be ready to keep the actions for many years.
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John Mackey, a former CEO of Whole Foods Market, a Amazon subsidiary, is a member of the Board of Directors of the Motley Fool. Adam Spatacco It has positions in Amazon, Nvidia and Palantir technologies. The Motley Fool has positions and recommends Amazon, Cisco Systems, Nvidia and Palantir technologies. The mold’s fool has a Outreach policy.
