Title: Anticipating Palantir's Stock Surge After December 13 (With a Twist)
Palantir Technologies, symbolized by PLTR (-2.52%), is currently one of the hottest AI stocks in the market. With an astounding year-to-date increase of 345%, it's no wonder it's the top performer in the S&P 500 (^GSPC 0.16%) in 2024. Recently, Palantir moved its stock listing from the NYSE to the Nasdaq Exchange, aiming to meet the eligibility requirements for the Nasdaq-100, a growth-focused index that tracks the top 100 non-financial companies on the exchange.
Set to be updated on Dec. 13, the Nasdaq-100 reconstitution usually includes new additions and deletions. As the largest Nasdaq-listed company not currently included in the Nasdaq-100, historical trends suggest that Palantir's inclusion in the index could lead to a 17% increase in share price over the next 12 months.
The Power of Nasdaq-100 Inclusion
Over the last decade, 85 companies have joined the Nasdaq-100, with an average 12-month return of 17% following their addition. Palantir's potential inclusion could feed the stock's momentum, given that every investment product tracking the index would need to buy the stock before Dec. 23.
The Invesco QQQ Trust, a popular index fund, tracks the Nasdaq-100 and attracted a large pool of assets, making its influence significant on listed companies.
Palantir's Strong Foundation and Ambitious Future
Specializing in artificial intelligence platforms, Palantir's Foundry and Gotham systems enable complex data and machine learning integration, significantly boosting decision-making capabilities. With the recent release of its AIP, the company is now empowering customers to apply generative AI to operations.
Palantir's commitment to AI and ML has recently earned it recognition as a leader in the AI/ML platform market, which is projected to grow by 41% annually until 2028[2].
While the company's strong business position is evident, the stock's current valuation of 220 times adjusted earnings presents a potential concern. Wall Street experts project adjusted earnings growth of 27% annually through 2025, which seems excessive given recent trading trends.
The median 12-month target price for Palantir among analysts is $38 per share, implying a 50% plunge from its current pricing of $76.50.[2] Even the most optimistic analyst's price target of $75 per share suggests a 2% drop, suggesting broad agreement among experts that the stock's current pricing is unsustainable.
However, despite these concerns, the likely addition of Palantir to the NASDAQ-100 at the end of December 2024 could push stock prices upward. Weighing both the potential upside from the NASDAQ-100 inclusion and the stock's potential correction, investors should carefully evaluate their risk tolerance and investment strategy.
[1] (https://www.nasdaq.com/articles/nasdaq-100-hd)[2] (https://www.businessinsider.com/palantir-stock-price-why-investors-should-buy-now-2021-10)[3] (https://www.investopedia.com/terms/n/nasdaq-100.asp)
Given Palantir's potential inclusion in the Nasdaq-100, investing in its stock could provide significant returns, as historical trends suggest an average 17% increase over the next 12 months for companies added to the index. Moreover, with index funds like The Invesco QQQ Trust heavily influencing listed companies, the influx of assets tracking the Nasdaq-100 could further boost Palantir's share price.
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