Palantir's AI-Driven Success: Stock Surge and Future Prospects

This Artificial Intelligence (AI) Stock Has Surged 733% Over the Past 21 Months -- Is a Split on the Horizon? | The Motley Fool

For its first few years as a public company, Palantir Technologies (PLTR -1.42%) struggled mightily to capture meaningful market share in the enterprise software space. The company's sluggish growth and heavy reliance on lumpy federal contracts fueled a perception that Palantir was really more of a government consulting operation and less so a legitimate player in the software arena. However, on April 7, 2023, Palantir CEO Alex Karp penned an investor letter that forever changed the narrative surrounding the company. In this note, Karp revealed to the world that Palantir would soon be launching its fourth major suite: the Artificial Intelligence Platform (AIP). Since then, Palantir stock has gained 733% (as of Jan. 10). It's not a coincidence that Palantir's skyrocketing share price has come at a time when all things AI are dominating the investment world. With that said, Palantir is not merely benefiting just from the positive narrative surrounding AI. The company has proven that it can compete with the tech sector's largest players, underscoring how game-changing AIP has been for the business. Considering the sharp rise in its share price in less than two years, Palantir could make an interesting candidate for a stock split. Below, I'll explore reasons why Palantir may or may not split its stock soon. As the chart above shows, Palantir stock really began to kick into a new gear during the last few months of 2024. As such, the company's valuation has become stretched and its climbing share price may make it out of reach for smaller retail investors. It's important to note that stock splits do not actually change the underlying valuation of a company. However, upon completing a split, the new split-adjusted price is often psychologically perceived as less expensive -- and so a larger body of investors tend to scoop up shares given the appearance of a lower price, pushing up demand, and in turn, the price of these shares. Furthermore, since stock splits increase the number of outstanding shares for a company, more shares become available to trade on the market. In short, by making an investment more accessible to a broader base of investors, Palantir's trading liquidity should improve following a split. Back in November, Palantir changed its trading exchange from the New York Stock Exchange (NYSE) to the Nasdaq (NASDAQINDEX: ^IXIC). Most likely, that move was rooted in how the company was being perceived by investors. As I alluded to above, some analysts on Wall Street have remained skeptical of Palantir's future success. However, with Nasdaq being a more a tech-focused index, listing its shares on Nasdaq is a way for Palantir to become more closely associated with high-growth names in the technology sector. Moreover, within a short span of time, Palantir was added to the Nasdaq-100 index -- which definitely helped the company land on the radars of more investors, specifically institutional investors. And now that Palantir has proven that it can generate consistent revenue and profit acceleration, it should be no surprise that it's one of the high-growth opportunities in the tech sector. But this means management won't be necessarily inclined to undertake a stock split primarily to increase trading liquidity. Finally, stock splits can be time consuming and expensive affairs from the leadership's perspective. Stock splits need to be approved by a company's board of directors, and generally speaking, a business will spend countless hours with investment banking and accounting firms running sophisticated modeling scenarios to figure out how a split might impact the business in different ways. Despite its success since the dawn of AIP in April 2023, Palantir is still very much in growth mode. To me, management should be more focused on scaling the business and acquiring market share rather than spending time looking at theoretical financial analyses following a split. In other words, I see the prospect of a stock split as an intriguing concept, but one that is ultimately more of a distraction and pet project for Palantir.

How Palantir Technologies Stock Surged 340% in 2024 | The Motley Fool

Palantir Technologies (PLTR -1.42%) just had a year for the record books. The artificial intelligence (AI) and data mining specialist soared 340% in 2024, according to data provided by S&P Global Market Intelligence. That made Palantir the best-performing stock in the S&P 500 and the third-best performer in the Nasdaq-100. There's little doubt that the excitement regarding the potential for AI helped fuel the stock's epic run, but a look under the hood shows that robust performance, a novel approach, and a number of strategic moves by management deserved a healthy dose of the credit as well. The biggest contributor to Palantir's success last year was its financial results. The company delivered four consecutive quarters of accelerating revenue growth and continued the profitability it had announced was a priority the year before. Make no mistake, it was surging demand for Palantir's Artificial Intelligence Platform (AIP) that fueled the results. This tool took AI from the drawing board to practical application, helping businesses make data-driven decisions by tapping into company-specific information. In a stroke of sheer genius, management developed boot camp sessions that paired customers with Palantir developers to take the mystery out of AI and create solutions they could use -- in as little as five days. Its recent results help highlight the success of this strategy. In the third quarter, revenue grew 30% year over year to $726 million, resulting in earnings per share (EPS) of $0.06, which surged 100%. But that tells only part of the story. The company's U.S. commercial revenue, which includes AIP, grew 54% year over year and 13% sequentially, while the segments customer count soared 77%. This helped push its remaining deal value (backlog) up 73%, which suggests the company's growth spurt will continue. Palantir's consistently strong results helped set the stage for what was to be a blockbuster 2024. By the third quarter, the company has achieved its fourth consecutive quarter of profitability under generally accepted accounting principles (GAAP). This checked the final box that would ultimately secure Palantir's admission to the S&P 500 in September. In mid-November, management made a calculated move, shifting Palantir's stock from the New York Stock Exchange to the Nasdaq, which ushered in its inclusion in the Nasdaq-100 when the index rebalanced in December. While these moves might seem much ado about nothing, Palantir's admission to these two benchmark indexes opened the stock up to much greater ownership among institutional investors, particularly those investing in exchange-traded funds that track the indexes in question. It's worth noting that the surge in Palantir's stock price has seen a commensurate increase in its valuation. The stock currently trades for 158 times forward earnings and 41 times forward sales (as of this writing). That said, the most commonly used valuation metrics struggle to capture the true value of high-growth stocks. Applying the more appropriate forward price/earnings-to-growth (PEG) ratio -- which takes into account Palantir's accelerating growth rate -- returns a multiple of 0.37, with any number less than 1 being the standard for an undervalued stock. For investors with the appropriate long-term outlook and willing to withstand the volatility that is sure to continue, Palantir is worth a look despite its seemingly frothy valuation.

After a 340% Gain Last Year, Could Palantir Soar Again in 2025? | The Motley Fool

Palantir Technologies (PLTR -2.52%) may have been one of the greatest success stories of 2024. The software company posted its biggest profit ever, joined the S&P 500, and saw its stock price soar 340%. This is thanks to its focus on artificial intelligence (AI) and growth in sales to both government and commercial customers. But today, as we start a new year, many investors and analysts worry that Palantir's stock price has climbed too high too fast. And if they're right, that could signal a lackluster 2025 for the company. So now is the perfect time to take a closer look at Palantir and consider whether this highflying stock indeed is heading for a decline -- or whether it could extend gains in 2025. First, a summary of Palantir's path so far. This software player isn't a new kid on the block, and instead has built its business over 20 years. Palantir helps customers aggregate their data and put it to good use -- something that has made governments its biggest customers. But in recent times, the commercial customer has taken interest in Palantir, and the revenue and customer number trends suggest commercial players could represent a major growth driver for the company moving forward. The business of aggregating data may seem rather dry, but it actually can produce pretty exciting results for both government and commercial businesses. By leveraging the power of their data, these players can make major gains in efficiency and even develop game-changing products or services. Palantir works with a variety of major names, from the Cleveland Clinic to United Airlines. For example, it helps the healthcare facility manage patient placement and has designed a predictive maintenance system for the airline. And thanks to Palantir's launch of its Artificial Intelligence Platform (AIP) a little over a year ago, demand for its services has soared -- and as I mentioned earlier, growth is particularly impressive in the commercial business. Just four years ago, Palantir had 14 U.S. commercial customers -- today it has about 300. And in the most recent quarter, U.S. commercial revenue climbed 54% after already generating double-digit growth quarter after quarter over the past two years. Palantir also developed a genius way of introducing AIP to potential customers. It holds boot camps so companies can give the platform a try and go from zero to a use case in a matter of hours. Demand for these camps has soared, and importantly, they often result in major contracts. For example, in the latest quarter, Palantir signed seven-figure deals with three customers less than two months after their boot camps. This momentum has translated into gains in profit for Palantir too, with the company reporting its highest-ever quarterly profit in the recent period, at $144 million. The fact that AIP still is a newish platform and that it's seeing high demand suggests more growth could be ahead. And the commercial customer could represent a key growth driver -- gains so far show these players are interested in Palantir's services and Palantir still has plenty of room to increase its commercial customer count. All of this sounds great, and so does the share performance. But this comes with one problem, and that's valuation. Today, Palantir shares trade at an eye-popping 150 times forward earnings estimates, a level that looks pretty expensive. But, before dropping the idea of buying Palantir stock and running in the opposite direction, it's worth thinking of the company's growth prospects. Here, we can look at Palantir's PEG ratio, a valuation measure that considers potential earnings growth ahead. A PEG ratio of less than 1 could signal a stock isn't overvalued and still may be worth buying. Right now, Palantir's forward PEG ratio is 0.3, down from more than 0.6 just a few weeks ago. This suggests there still could be room for gains ahead for Palantir. And as long-term investors, aiming to buy and hold a stock for five-to-10 years, buying Palantir today -- even at a lofty level from a forward P/E perspective -- still could be a winning move. If the company continues along its current path, it has what it takes to deliver earnings growth and stock performance over time. As for 2025, it's impossible to predict for sure whether Palantir stock will climb. But, while I don't expect another 300% gain, I am more optimistic than Wall Street and think this top AI stock could advance in the months to come.

2 Reasons to Buy Palantir Stock Like There's No Tomorrow

Palantir Technologies (PLTR -2.52%) stock's stunning surge of 372% in 2024 has made the stock extremely expensive, which explains why investors may be wary of buying this high-flying artificial intelligence (AI) software specialist right now. Wall Street is expecting Palantir stock to dip in the coming year, as evident from the 12-month median price target of $39, which points toward a 48% drop from current levels. According to 22 analysts that cover Palantir, this median price target suggests that the stock may have gotten ahead of itself, and that's not surprising if we take a look at its valuation multiples. After all, a price-to-earnings ratio of 399 and a sales multiple of 72 tell us that investors will have to pay significantly rich multiples to buy this AI stock. The tech-laden Nasdaq-100 index, on the other hand, trades at 32 times earnings. However, there are a couple of reasons that Palantir may be worth buying hand over fist despite its expensive valuation. Palantir is the leading player in a fast-growing market Palantir's growth has accelerated in recent quarters thanks to the fast-growing demand for the company's Artificial Intelligence Platform (AIP), which allows governments and organizations to integrate generative AI into their operations. It is worth noting that this platform was ranked as the top AI/ML (machine learning) platform by market research firm Forrester last year, ahead of well-established names such as Microsoft, Amazon, and IBM, among others. However, this wasn't the only time that Palantir has been ranked among the top vendors of AI software platforms. In September 2024, Dresner Advisory Services gave Palantir the top rating in usability and analytical features and functions in its AI, Data Science, and Machine Learning Market Study. Meanwhile, market research firm IDC ranked Palantir No. 1 in the AI software platform market back in 2021. IDC points out that the AI software platforms market was worth an estimated $14.2 billion in 2021, growing by almost 37% that year. Palantir's revenue in 2021 stood at $1.54 billion, growing 41% during that year. However, Palantir was getting the majority of its revenue in 2021 from selling software platforms and analytics solutions to government customers. It has only been in recent quarters that its AI business has started taking off, which is evident from the rapid growth in the company's commercial customer base. For instance, in 2021, Palantir's commercial revenue jumped 34% to $645 million, compared to the 47% growth in government revenue, which was $897 million. Coming to Palantir's latest results for the third quarter of 2024, its commercial customer count jumped an impressive 51% year over year to 498. Given that Palantir had a total of 629 customers at the end of the quarter, it can be assumed that the company finished the quarter with 131 government customers as compared to 123 in the same quarter a year ago. This massive jump in the commercial customer base is a result of the rapid adoption of Palantir's AIP, which has witnessed robust demand in recent quarters thanks to the company's aggressive go-to-market strategy of conducting "boot camps." Not surprisingly, Palantir now expects to report at least 50% growth in its U.S. commercial business for 2024 to $687 million. That points toward a solid jump from the 36% growth in 2023 to $457 million. This terrific uptake of Palantir's AIP should allow it to remain one of the top players in the AI software platforms market in the long run, and that should turn out to be a solid tailwind for the company. That's because the size of the AI software platforms market is expected to hit $153 billion in 2028, as per IDC. Given that Palantir is quickly building up a big base of commercial customers, it should be able to make the most of this huge addressable opportunity and continue to deliver stronger top and bottom-line growth in the coming years. Favorable unit economics could lead to outstanding earnings growth Palantir's earnings are growing at a faster pace than its revenue. In the third quarter of 2024, the company's adjusted earnings increased 43% year over year to $0.10 per share as compared to the 30% increase in revenue to $726 million. This faster growth in the bottom line can be attributed to the company's ability to first land a new customer and then expand its business with those customers. Palantir management provided a few examples of this on the November earnings conference call: To highlight a few notable deal cycles: a large American equipment rental company expanded its work with us less than eight months after converting to an enterprise agreement, increasing the account ARR 12-fold; a bottled water manufacturer, a specialty pharmaceutical company, and an agricultural software provider, all signed seven-figure ACV deals less than two months after their initial boot camps. This is a trend that's likely to continue thanks to the secular growth of the AI software platforms market and Palantir's AIP offering, which is considered to be superior when compared to peers. As a result, Palantir should continue to enjoy favorable unit economics as its land-and-expand strategy should allow it to generate more profit from each customer. The effects of favorable unit economics are already visible on Palantir's margin profile. The company reported an adjusted operating margin of 38% in the third quarter of 2024, up from 29% in the year-ago period. This figure could move higher in the future and power Palantir's earnings growth, given that it has been adding new commercial customers at a rapid pace of late, and those customers could strengthen their relationships with the company to deploy generative AI solutions. That's why it would be prudent to look past Palantir's valuation. The company is expected to deliver a 52% jump in earnings in 2024 to $0.38 per share. The estimates for 2025 and 2026 have moved significantly higher in the past few months, a trend that could continue, as the discussion above indicates. PLTR EPS Estimates for Next Fiscal Year data by YCharts As such, investors looking to add a growth stock to their portfolios would do well to look at the bigger picture instead of just the valuation as the multibillion-dollar opportunity in AI software platforms, Palantir's robust position in this market, and the company's efforts to make the most of this space could help it remain a top AI stock in the long run.

Will Palantir's Stock Double in 2025? Here's 1 Metric That Gives a Clear Indication

Palantir Technologies (PLTR -2.52%) was one of the hottest artificial intelligence (AI) stocks of 2024. Its stock jumped 340% in 2024, meaning it more than quadrupled in value in just one year. That extraordinary performance isn't common, but with all of the tailwinds in the AI space, some investors are wondering if Palantir's stock price could double in value in 2025. An examination of one metric regarding Palantir directly addresses this level of performance, and shareholders should take notice of it to determine what to do with their holdings. Potential investors considering the stock might also be interested. Palantir's software has found a use case in multiple fields Palantir is an AI company that provides purpose-built solutions for its clients. Originally, its target audience was government entities, but that eventually expanded to include commercial customers. The primary use of its software is to run large amounts of data through pre-built AI models, and then present its findings to those with decision-making authority. This gives those people the best information possible at the time with which to make a decision. One of the latest additions to Palantir's product line is its Artificial Intelligence Platform (AIP). AIP is Palantir's answer to the generative AI trend. AIP allows its users to integrate AI models into a business's inner workings and automate many processes. It also includes a feature for AI agents to perform tasks that were once done by people, further solidifying its use case. AIP has driven a massive spike in demand for Palantir's software, especially on the U.S. commercial side of its business. In Q3, Palantir's total revenue increased at a 30% clip to $726 million, while U.S. commercial revenue rocketed 54% higher to $179 million. Clearly, the U.S. commercial business isn't Palantir's largest segment, but it is the company's fastest-growing one. Alongside its strong growth, Palantir is profitable, consistently producing around 20% profit margins. PLTR Profit Margin (Quarterly) data by YCharts. While some other software companies' profit margins can surpass 30%, 20% is still a noteworthy figure, as it shows that management values profitability alongside growth. Those are some strong financial results, but do they add up to a company that can double its market cap in 2025? Palantir's valuation could hinder its stock's success in 2025 It's hard to debate that Palantir isn't a fantastic company that's succeeding in the AI arms race. However, the market has seen this success as outright dominance and bid up the stock to unreasonable levels. Palantir's revenue increased 30% year over year this last quarter, but the stock rose 340% for the year. Something doesn't add up there, and the disparity appears in Palantir's valuation. A stock's valuation gives investors a relative idea of how much the market is willing to pay for a piece of a company. While this means nothing by itself, it is extremely useful when comparing stocks. Most software stocks trade between 10 and 20 times sales. Palantir trades at 69 times sales. Data by YCharts. Investors are paying a massive premium for Palantir's stock over other software companies that are growing just as fast as it is. Is this premium worth it? I'd say no. AI hardware king Nvidia posted multiple quarters in a row where its revenue more than tripled year over year. However, Nvidia never traded for more than 46 times sales during that run. With Palantir's valuation well higher than that despite far slower growth, it's safe to assume that the stock may be in a bubble. As a result, I don't think the stock will double in 2025. In fact, I wouldn't be surprised to see it decline throughout the year. While Palantir, the company, is doing fantastic and will continue to produce great results in 2025, Palantir, the stock, has already baked in years of growth, and there isn't much upside left.

Why analysts are split on Palantir's $167B valuation

Investors should pay close attention to Palantir Technologies (PLTR) in 2025 as its stock shows signs of disconnect from its underlying business fundamentals. Following a remarkable 2024 with a 356% stock increase, much of the gain appears linked to hype around its AI capabilities rather than actual business performance. Palantir specializes in software that processes large volumes of information to provide actionable insights in real-time. Initially focused on government contracts, Palantir has successfully expanded into the commercial sector, primarily driven by demand for its Artificial Intelligence Platform (AIP). This platform integrates AI into clients' operations, enhancing its appeal beyond standalone tools. In Q3 2024, the company's revenue rose 30% year-over-year to $726 million, with U.S. commercial revenue seeing an impressive 54% increase to $179 million. Palantir's limited customer base of 321 U.S. commercial clients suggests significant growth potential. However, the cost of Palantir's software is a crucial factor. The annualized average revenue per U.S. commercial client is approximately $2.23 million, indicating that only a limited number of companies can afford this premium service. Alternatives such as outsourcing AI projects to consulting firms or developing in-house solutions pose additional competition, potentially limiting Palantir's growth unless it introduces a more affordable product line. Palantir's $100 stock price target may be closer than you think Palantir's stock valuation has raised concerns among analysts. Currently, it trades at 378 times earnings and 69 times sales, starkly contrasting with Nvidia, which has never exceeded 247 times earnings and 46 times sales despite significant revenue growth. If Palantir sustains a 30% revenue growth rate over the next five years and achieves a 30% profit margin, it would still only justify trading at 60 times earnings -- considered expensive by industry standards -- at current stock prices. Analyst estimates show a projected revenue growth of only 24% for the next year, suggesting that existing valuations are overly optimistic. As of now, Palantir's market capitalization sits at $167 billion, with a trailing price-to-earnings ratio exceeding 60, based on future earnings potential of $3 billion by 2029. This figure is nearly three times greater than the S&P 500's forward price-to-earnings ratio of 22. Furthermore, the stock's price-to-sales ratio of 68 represents some of the highest valuations historically seen in the growth stock arena, raising the risk for prospective investors. Disclaimer: The content of this article is for informational purposes only and should not be construed as investment advice. We do not endorse any specific investment strategies or make recommendations regarding the purchase or sale of any securities.

1 Major Signal for Palantir Stock That Investors Must Pay Attention to for 2025 | The Motley Fool

Sorting through what is signal and what is noise as an investor is a key part of being successful. When you see a glaring signal, not acting on it can be a disaster. One area where I'm seeing a flashing signal is in Palantir's (PLTR 6.25%) stock. Palantir had one of the best 2024s of any stock, let alone an artificial intelligence (AI) company, rising 356%. However, most of that run-up has to deal with hype and fluff around the stock, and the stock has become disconnected from the actual company. As a result, I think it's best if investors take their profits and invest elsewhere, as this one metric is screaming to sell the stock. To understand why Palantir has run up so much, let's look at what the coming does. Palantir makes software that takes as much information as possible, processes it, and then gives the user real-time information about what actions they should take. This is a fairly simple concept in general, but it isn't easy to do, which is why Palantir stands out in the industry. Another reason Palantir stands out is that it started with government contracts. Originally, it was solely used for government purposes, but the company expanded its reach to the commercial side when it saw demand for its product. Lately, a lot of the demand has been driven by the company's Artificial Intelligence Platform (AIP). AIP allows its clients to weave Palantir's AI into a business's inner workings rather than use it as a tool on the side. This integration takes AI to the next step and has been a huge growth driver for Palantir. This boom spilled over to Palantir's financial results, with third quarter revenue rising 30% year over year to $726 million. However, U.S. commercial saw even better results, with revenue rising 54% year over year to $179 million. With only 321 U.S. commercial clients, Palantir seems to have a huge runway. But there's a catch. Palantir's software isn't cheap. If you annualize Q3's U.S. commercial revenue and then divide it by the customer count, you'll get an average spend per customer. That comes out to $2.23 million, which shows how expensive this software is. There isn't a large list of companies that can afford to spend that much on software, so Palantir's customer base is fairly limited. Furthermore, when you're within the range of companies that can afford that cost, there are also other options. Outsourcing the AI work to a consulting firm like Accenture (ACN 1.44%) is one option, or building it in-house is another. Either way, the sky is not the limit for Palantir; there is still a firm ceiling unless they launch a lower-tier product. Regardless, Palantir will continue to succeed, as it still has a large market to capture. However, it isn't as big as some bullish investors believe. This is a problem, as the stock assumes the sky is the limit. From a valuation standpoint, Palantir's stock has gotten out of control. The stock trades for 378 times earnings and 69 times sales. AI king Nvidia has never traded for more than 247 times earnings and 46 times sales since it began its run in 2023. Nvidia posted multiple quarters in a row in which its revenue tripled, while Palantir's is only rising by 30%. This valuation doesn't make sense and has a ton of froth baked into it. If Palantir could maintain its 30% revenue growth rate for five years and then achieve a 30% profit margin (a great margin for a software company), it would trade at 60 times earnings (a very expensive price tag) at today's stock price. That's right; if Palantir's stock doesn't budge for five years, it will only then achieve a reasonable valuation. Given that Wall Street analysts only expect 24% revenue growth next year, this projection is extremely optimistic. As a result, I think investors need to take their profits and find another company to invest in, as Palantir's valuation has gotten out of control and will likely correct sometime in 2025.

Why Wall Street Thinks Palantir Stock Will Plunge 34% in 2025 but This AI Stock Will Soar 55% | The Motley Fool

Palantir Technologies (PLTR -2.52%) emerged as one of the biggest winners of 2024. Shares of the artificial intelligence (AI) and data analytics software company skyrocketed 340%. Palantir's additions to the S&P 500 and Nasdaq-100 indexes helped fuel investor excitement. Most Wall Street analysts don't have high hopes for Palantir in 2025. They think the stock could plunge 34% over the next 12 months. However, analysts are decidedly upbeat about another AI stock that they predict will soar 55% this year. Few stocks outperformed Palantir in 2024, but MicroStrategy (MSTR -2.85%) did. Shares of the AI enterprise analytics software company zoomed almost 360% higher last year. And while Palantir is off to a rocky start in 2025, MicroStrategy's momentum continues. Financial infrastructure and data provider LSEG surveyed nine analysts in January who cover MicroStrategy. Three of them rated the stock as a "strong buy." The other six analysts recommended MicroStrategy as a "buy." As mentioned earlier, the consensus Wall Street 12-month price target reflects an upside potential of roughly 54%. The most optimistic analyst thinks MicroStrategy's share price could jump another 90%. The outlook for Palantir is a much different story. The average analysts' price target for the stock is indeed 34% below the current share price. Of the 22 analysts surveyed in January by LSEG, only four rated Palantir as a "buy" or a "strong buy." Ten analysts recommended holding the stock. Another six analysts rated it as an "underperform" with two recommending selling. Why is Wall Street so bearish about Palantir and bullish about MicroStrategy? It's not because of either company's recent growth. Palantir's revenue soared 30% year over year in the third quarter of 2024. The company's GAAP earnings per share (EPS) doubled, while its adjusted EPS jumped 43% higher. On the other hand, MicroStrategy's revenue declined 10.3% year over year in Q3. Its bottom line also deteriorated significantly with a much wider net loss than in the prior-year period. The different takes on Wall Street don't appear to be related to the two AI software companies' growth prospects in 2025, either. Analysts project Palantir's revenue will increase by around 25% this year. However, the consensus is that MicroStrategy will grow its revenue by less than 3%. Is the gap in enthusiasm among analysts due to valuation? Sure, Palantir's premium price is undoubtedly a big factor behind Wall Street's bearish view of the stock. Its shares trade at nearly 145 times forward earnings and 63.6 times trailing 12-month sales. However, MicroStrategy's price-to-sales ratio stands at 141.6. That makes Palantir almost look cheap by comparison. Instead of growth or valuation, analysts think so highly of MicroStrategy primarily because of the company's focus on Bitcoin (BTC 1.62%). The company is the world's largest corporate holder of the cryptocurrency and has adopted Bitcoin as its primary treasury reserve asset. President-elect Donald Trump has discussed creating a national Bitcoin reserve and relaxing regulations on cryptocurrencies to make the U.S. a "crypto capital." These efforts could make MicroStrategy's Bitcoin holdings much more valuable. I don't know whether or not Palantir's share price will plunge 34% and MicroStrategy's share price will soar 55% in 2025. However, I think Wall Street is directionally correct about Palantir. Although I fully expect sales of the company's software will continue to grow significantly, that growth appears to be more than baked into its share price already. It's a tougher call for MicroStrategy. The stock's future hinges primarily on the price of Bitcoin. While the incoming Trump administration seems likely to be very pro-Bitcoin and pro-crypto, the value of Bitcoin depends entirely on what people think it's worth. Maybe people will think it's worth a lot more over the next 12 months; maybe not. MicroStrategy's share price could jump 55% this year. However, I'm more comfortable investing in companies whose growth depends more on their ability to grow earnings instead of hopeful expectations of increasing cryptocurrency valuations.