Should You Buy Palantir Stock Before Monday's News? 2 Critical Things Investors Need to Know

As Palantir Technologies (PLTR) prepares to release its fiscal Q3 earnings on Monday, November 4, investors are wondering whether to buy the stock ahead of the news. With a market cap of $94.8 billion, Palantir operates in the software and data analytics industry, building and deploying platforms like Palantir Gotham, Foundry, Apollo, and AIP to assist intelligence agencies and organizations in analyzing large datasets and driving operational decision-making. Here are two critical things investors need to know before making a decision.


1. **Revenue Growth and Earnings Potential**
Palantir's revenue growth trajectory has been impressive, with a projected 25% YoY increase in Q3 2024, following a 27% increase in Q2 2024. This growth is driven by expanding AI-powered solutions and defense sectors. In comparison, Nvidia, a leading AI hardware provider, reported a 31% YoY increase in revenue in Q2 2024. While Palantir's growth is slightly lower than Nvidia's, it is still competitive within the AI and data analytics sector.

Palantir's earnings are projected to grow 29% YoY in Q3, with analysts expecting EPS of $0.09. The company has surpassed or met Wall Street's bottom-line estimates in two of the last four quarters while missing on two other occasions. In the most recent quarter, PLTR missed the consensus EPS estimate by 25%. For fiscal 2024, analysts expect PLTR to report EPS of $0.19, up 137.5% from $0.08 in fiscal 2023.


2. **Valuation and Risks**
Palantir's valuation is indeed high, with a P/S ratio around 40x and a forward P/E of over 100, compared to Nvidia's 60 and Alphabet's 23. Despite this, investors have priced in significant growth, expecting a 22% CAGR in revenue over the next five years. However, Palantir's high valuation raises concerns about sustainability and potential overvaluation.

Palantir faces key risks and uncertainties, including execution challenges in commercial sales and dependency on government contracts. Despite its strong AI platforms, Palantir's commercial customer count remains low, raising concerns about its sales strategy. Additionally, its reliance on government contracts may lead to revenue lumpiness and sustainability issues.


In conclusion, Palantir's impressive revenue growth and earnings potential make it an attractive investment option. However, its high valuation and potential risks should be carefully considered before making a decision. Investors should monitor updates on Palantir's platforms, partnerships, and earnings to assess its growth trajectory and valuation. As always, it is essential to do thorough research and consider your risk tolerance before making any investment decisions.