Shares of the artificial intelligence (AI) decision making company Palantir (PLTR 2.86%) traded over 3% higher, as of 11:09 a.m. ET Monday. The stock is coming off several new research reports from Wall Street analysts last week, and also could be benefiting from the escalating conflict in the Middle East.
Analysts optimistic but torn over valuation
Loop Capital analyst Mark Schappel issued a new report late last week, reiterating a buy rating on Palantir and raising his price target from $130 to $155, a new Wall Street high. Schappel said that Palantir's foray into enterprise AI has only just begun and will soon begin to scale rapidly.
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After a meeting with management last week, Schappel expressed confidence in Palantir's artificial intelligence solutions and their ability to help businesses and organizations automate tasks and help companies make intelligent decisions.
However, other analysts issuing reports late last week expressed concerns about the stock's high valuation. Mizuho analysts increased their price from $94 to $116, but assigned an underperform rating, considering the stock already trades close to $142 per share, as of this writing. Analysts at Citigroup are optimistic about the company's product offerings but assigned a price target of $115.
Palantir's stock also may be benefiting from the conflict between Israel and Iran. Defense stocks have risen since the conflict broke out late last week and Palantir reportedly provides technology to the Israeli government and defense forces.
Palantir has defied the bears so far
Palantir's stock has ripped nearly 89% this year, overcoming all hurdles thrown at the broader market this year. Over the last five trading days, the stock is up over 8% and now trades at an incredible 244 times forward earnings.
I simply do not buy stocks at these kinds of valuations, so I'd recommend staying on the sidelines and waiting for dips, or taking a small, speculative position. To buy Palantir, investors really need special insight into the company's technology and need to see a clear path to achieving the kind of scale and earnings necessary to deserve this massive valuation.
