Even though Palantir Technologies (PLTR 0.57%) has experienced a 20% drawdown, the stock is still one of the best performers of the past few years. Up over 1,700% since going public, the artificial intelligence (AI) software and analytics pioneer has become an investor favorite on the back of accelerating revenue growth, increasing earnings power, and its unique founder Alex Karp.
However, if you look at the underlying business, it is clear that Palantir's stock price is divorced from reality. The stock has a market cap of $400 billion compared to under $4 billion in revenue and even less in earnings. Palantir stock is likely going to disappoint investors who buy today.
Here is a value stock that will likely be worth more than Palantir by the end of 2026.
NYSE: PM
Key Data Points
Steady earnings from smokeables
The company's name is Philip Morris International (PM 0.26%), a global nicotine giant that produces steady cash flow for shareholders each and every year. It owns the Marlboro cigarette brand, along with other smokeable products that it sells outside the United States.
With population increases and a greater tolerance for smoking in markets outside of North America, Philip Morris's smokeables volumes hold up much better than the competition despite decreased usage globally of cigarettes. Through the first nine months of 2025, smokeable volumes declined just 1.3% year over year for Philip Morris.
By increasing prices, Philip Morris International is able to grow its smokeables revenue, which was up 1% year over year through the first nine months of the year. Smokeables are stable cash producers for shareholders, generating the majority of company free cash flow of $10 billion over the last 12 months.
Image source: Palantir Technologies.
Long-term growth in nicotine pouches and vaping
Cigarettes should produce stable cash flow for Philip Morris for a decade, if not longer. But the true gem of this business lies in its new age nicotine brands, namely IQOS, Zyn, and Veev.
Zyn is a leading tobacco-free nicotine pouch brand that is growing like wildfire in the United States and expanding around the globe. An estimated 205 million Zyn cans were sold in the United States last quarter alone, up 37% year over year and providing the majority of category share growth for nicotine pouches. IQOS is a heat-not-burn smoking device that is popular in Japan and Europe, while Veev is an electronic vaping device that is seeing accelerating unit volume growth.
Altogether, smoke-free net revenue has grown by 16.1% year over year so far this year and now counts for 41% of total net revenues. As it becomes a growing part of the Philip Morris International business, it will help the company put up durable revenue growth over the next five years and beyond.
PM EBIT (TTM) data by YCharts.
Much cheaper valuation
What separates Philip Morris International from Palantir is the stock's much cheaper valuation. Philip Morris has a price-to-earnings ratio (P/E) of 28 compared to Palantir's 391. Yes, a company like Palantir is growing much faster than Philip Morris International, but a decade of growth is already priced into the stock at current levels.
Philip Morris generates $13.5 billion in EBIT (earnings before interest and taxes). Palantir generates $850 million. It may take a decade to catch Philip Morris International's earnings power, if it ever does. Then why is Palantir trading at a market cap of $400 billion while Philip Morris trades at $243 billion?
Current stock prices don't match the fundamentals. By the end of 2026, it is likely that Philip Morris International surpasses Palantir in market capitalization.
