EN
Should You Buy Palantir Stock Before Nov. 2?
Key Points
Wall Street expects Palantir to report exceptional revenue and profit growth for the third quarter.
The Palantir Artificial Intelligence Platform (AIP) is witnessing robust demand from both commercial and government partners.
Palantir stock has risen considerably over the last few months, and the stock has gotten pricey.
Palantir Technologies (NASDAQ: PLTR) is scheduled to report third-quarter earnings on Monday, Nov. 2. With shares climbing 57% since its second-quarter earnings announcement on Aug. 3, expectations are certainly high.
Should investors buy Palantir stock before earnings next week?
Missed AI’s "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we’re only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
Wall Street's expectations for Palantir are sky-high
According to consensus estimates, analysts anticipate Palantir to generate $2.18 billion in revenue and $0.41 in earnings per share (EPS) for the third quarter. These estimates imply annual revenue growth of 85% and earnings growth of 95%.
Demand for the company's Artificial Intelligence Platform (AIP) is accelerating across Palantir's commercial and government businesses as organizations continue seeking efficient and cost-effective ways to deploy AI.
Image source: The Motley Fool.
Avoid timing your buys
While Palantir's growth prospects are compelling, its valuation already reflects extreme levels of optimism. The stock trades around 87 times forward earnings, leaving investors particularly vulnerable if results disappoint or guidance falls short of expectations.
Moreover, even a considerable earnings beat doesn't guarantee that shares will rise. Momentum stocks often experience sharp reversals when expectations become misaligned with reality. Attempting to predict these short-term movements is not a reliable investment strategy in the long run.
Is Palantir stock a buy?
While I see Palantir as an attractive artificial intelligence stock, investors should focus on the company's ability to sustain revenue growth, expand profitability, and strengthen its competitive moat over the next decade.
Rather than making a sizable investment before earnings, gradually accumulating shares over the long run will be a more disciplined approach. Palantir's long-term growth opportunities are more compelling than trying to profit from a single earnings report.
Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.