Key Points
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Palantir stock is getting pricey, but there are still a few reasons to buy the name on strength.
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Government and commercial growth led by its leadership in AI are reasons not to bet against the high-flyer.
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Shares of fast-rising AI software titan Palantir (NASDAQ:PLTR) have defied the odds and expectations once again, blasting off to new highs in mid-May, shortly after the post-Liberation Day tariffs sent the broad S&P 500 reeling into correction territory. Undoubtedly, it seems like even the scariest macro event can’t hold the AI software boom back.
With shares of PLTR sitting close to fresh new highs of $132 and change, questions linger as to whether it’s too late to punch one’s ticket into the AI star held in such high regards by big-name analysts, including Wedbush Securities’ Dan Ives, who’s referred to the firm as the “Messi of AI” more than once.
Though time will tell if Palantir will stay dominant as more AI software firms come online to seize the AI opportunity, I think a “Messi-like” multiple ought to be paid for the generational growth stock. And while it’s difficult to justify scooping up some Palantir stock here based on any traditional valuation metric, I do think there are a wide range of reasons to believe that Palantir isn’t just a bubble waiting to burst and that CEO Alex Karp and company can grow into the sky-high multiple.
Here are five reasons Palantir stock may still be worth nibbling in June as it experiences another one of its breakout moments.
Momentum with government contracts
First and perhaps most obvious, Palantir is continuing to win big government contracts. In the past several months, the AI software juggernaut has inked huge deals with the U.S. government, ranging from the $795 million Department of Defense contract to the smaller but still notable $218 million Space Force contract.
Indeed, the U.S. government has recognized early on the kind of AI edge the firm can provide. As the Trump administration continues spending in tech and defense, I’d be inclined to think the pace of new and extended contracts could persist or even accelerate. In a prior piece, I highlighted the proposed Golden Dome missile defense system as a massive undertaking that could use a bit of help from the likes of Palantir.
Commercial growth is the next frontier.
Beyond government contracts, Palantir has a world of opportunity in the commercial scene. Dan Ives previously cited that rapid commercial growth and innovation in AI could help Palantir achieve a $1 trillion market cap. And though much of the long-term commercial growth opportunity is baked in at this juncture (the commercial catalyst is now an expectation), I do think that many investors may risk underestimating the magnitude of the commercial growth on the horizon, especially if Palantir can really tailor its powerful solutions to meet the needs of specific industries.
In any case, Palantir’s AI Platform (AIP) is going to be doing much of the heavy lifting for commercial growth. And until AIP slows down, betting against the firm could continue to be a mistake despite the heftier multiple.
The AI Platform (AIP) is a serious growth driver
AIP is powering some serious growth, with the platform charging commercial sales growth to 71% year over year in the first quarter of this year. The impressive platform has been put to good use in a number of industries. As more industry players discover what they’ve been missing out on, I do see AIP powering even more strength, even as macro headwinds from tariffs weigh more heavily on the broader economy. Just like the AI chip boom we had more than a year ago, we could witness an AI software rush of sorts as industry players aim to gain any slight edge possible.
Management continues to stay above the pack.
Palantir’s fantastic managers are a reason to stick with Palantir despite rising expectations and valuations. CEO Alex Karp and co-founder Peter Thiel are stellar innovators who know how to seize generational opportunities. With Karp’s unconventional leadership style and focus on winning the long game, it should be no surprise why some analysts, like Ives, are sticking with the name well after its meteoric rise.
Technical strength
Finally, Palantir stock looks technically strong again, with the stock quickly recovering the ground lost in spring. With robust momentum and shares staying comfortably ahead of 50-day and 200-day moving averages, the name appears to be one of the most enticing breakout plays in the market right now.
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The post 5 Reasons To Buy Palantir Stock in June appeared first on 24/7 Wall St..
