In the realm of artificial intelligence, two prominent players have been making waves in the market: Meta Platforms, Inc. and Palantir Technologies, Inc. Since mid-September, both stocks have experienced significant gains, with Palantir leading the charge. While Meta has reached new heights, Palantir still has yet to reclaim its January 2021 peak.
A closer examination of their performance reveals that Palantir has surged an impressive 133% year-to-date, earning it the fourth spot among the S&P 500’s top performers. Meta, on the other hand, has gained a respectable 68%, securing the 11th position on the list. Both companies have outpaced the broader market, as represented by the SPDR S&P 500 ETF Trust.
Valuations for both stocks have become increasingly expensive following their recent rally. Palantir’s forward price-earnings ratio stands at a lofty 95.2, while Meta’s forward P/E ratio is more modest at 24.75, in line with the communications services sector’s average.
Palantir’s upward trajectory began on September 9, when it was announced that the company would be added to the S&P 500 Index. This milestone was seen as a significant validation of Palantir’s profitability profile. Despite a brief pullback, the stock has continued to climb since early October.
Meta, meanwhile, found its footing in early August and has been trending upward since then. The company’s recent Meta Connect conference showcased a range of innovative products, including AI-driven chatbots and augmented reality glasses. This has helped drive the stock’s steady ascent.
Looking ahead, analysts’ price targets suggest that Meta may have modest upside potential, while Palantir could be due for a correction. However, with the next quarter expected to be seasonally strong, both stocks may continue to defy gravity despite their stretched valuations. Investors will be keeping a close eye on Meta’s upcoming third-quarter results and Palantir’s deal flow and guidance.
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