Prognostication: Two Artificial Intelligence (AI) Shares Might Exceed Palantir's Value by 2030

Prognostication: Two Artificial Intelligence (AI) Shares Might Exceed Palantir's Value by 2030

Palantir, with its skyrocketing stock price since 2024, has earned the title of one of the best AI investment plays. However, with its current valuation at around $160 billion, some may question whether the expectations embedded in its price are truly justified by its fundamentals.

Two notable AI stocks that could potentially surpass Palantir in value by 2030 are Snowflake and CrowdStrike. The reason lies in their valuation and growth.

Let's first address the elephant in the room: Palantir's growth. While its AI software has garnered popularity in the AI space, its growth isn't as remarkable as some may think. In the third quarter, Palantir's revenue increased by 30% year over year, which is commendable but not extraordinarily impressive. This rate is nearly identical to Snowflake and CrowdStrike's latest quarterly revenue growth of 28% and 29%, respectively.

However, track the companies' revenue growth over the past three years, and a more obvious pattern emerges. Palantir's cumulative revenue growth has only reached 61%, while Snowflake and CrowdStrike have soared ahead with a whopping 180% and 158% growth, respectively.

Now, let's talk about valuation. Palantir's stock is trading at an eye-popping 61 times its trailing 12-month sales. This enormous premium is what accounts for its larger market cap. But is it justified? Given Palantir's growth level, this valuation is a red flag.

In contrast, Snowflake and CrowdStrike are trading at lower multiples. If these two companies could achieve profitability similar to Palantir, their stocks would likely surge, potentially reaching the astronomical levels Palantir currently holds.

But profitability is a double-edged sword for Palantir. While it is the only consistently profitable company in the trio, this success might not automatically translate to higher valuation multiples. After all, Snowflake and CrowdStrike are lagging behind in profitability.

There's a solid chance that both Snowflake and CrowdStrike will turn profitable over the next five years, seeing their stock prices mirror or surpass Palantir's. By 2030, it's not out of the realm of possibility that these two AI giants will have far exceeded Palantir in value.

So, if you believe in Snowflake and CrowdStrike's potential for profitability, they might be the smarter investment choice right now.

Enrichment Data:

Although Snowflake and CrowdStrike may not currently outshine Palantir in profitability, their growth strategies and lower valuation multiples position them as strong contenders to surpass Palantir in the long term.

• Snowflake's Revenue Growth: Snowflake boasts an impressive growth rate, with a cumulative revenue increase of 180% over the last three years. This strong revenue growth, coupled with Snowflake's robust data cloud software, could fuel further expansion, potentially surpassing Palantir's valuation by 2030.
• CrowdStrike's Revenue Growth: CrowdStrike exhibits remarkable growth, too. Its cumulative revenue has risen by 158% over the past three years. This aggressive expansion, along with CrowdStrike's prowess in cybersecurity and AI, positions it as a significant rival to Palantir.
• Valuation Multiples: Palantir's stock is currently valued at an eye-watering 61 times its trailing sales. In contrast, Snowflake and CrowdStrike are trading at substantially lower multiples, making them attractive buy-and-hold candidates. Should these two manage to achieve profitability mirroring Palantir's performance, the valuation gap between them and Palantir could close, potentially surpassing Palantir by 2030.
• Profitability: Palantir's consistent profitability presents both an advantage and a challenge. Its steady stream of income strengthens its position, but concerns about its growth and the high valuation multiples could make it vulnerable to surpassing by Snowflake and CrowdStrike if those companies can achieve sustainable profitability.

Overall, while Palantir has established itself as a powerful company in the AI space, Snowflake and CrowdStrike's impressive growth and relatively lower valuations could make them more appealing investment options, leading to potential outperformance by 2030.

Given Palantir's high valuation multiples and steady but not extraordinary growth, some investors might consider shifting their focus to stocks like Snowflake and CrowdStrike, both of which show significant growth potential and are currently trading at lower multiples. With Snowflake's 180% revenue growth over the past three years and CrowdStrike's 158% growth, they present attractive opportunities for investing in finance and expecting potential returns by 2030.

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