Meta Platforms, Inc. META and Palantir Technologies, Inc. PLTR are among the artificial intelligence stocks that have seen strong gains since early to mid-September. While the former is perched at a record high, the latter, despite its recent strong run, is yet to reclaim its Jan. 2021 peak.
Here’s a look at the relative performance of these two stocks and what the near-term holds for them:
Meta Vs. Palantir: Meta has gained over 68% for the year-to-date period, while Palantir is up a steeper 133%. The data analytics company co-founded by Peter Thiel is the fourth best-performing S&P 500 company this year, while Meta, co-founded by Mark Zuckerberg, holds the 11th spot on the list.
Source: Benzinga Pro
As is seen in the chart, both stocks have outperformed the broader market, as represented by the SPDR S&P 500 ETF Trust SPY – an exchange-traded fund that tracks the S&P 500 Index.
Valuations of both stocks have become expensive following the recent spike. The forward price-earnings ratio for Palantir is currently at a hefty 95.2 but Meta is trading at a more modest forward P/E valuation of 24.75. The social media giant’s P/E ratio is fairly in line with 21.3 which is applicable to the communications services sector.
See Also: Best Artificial Intelligence Stocks
The Palantir Rally: Palantir has been on an uptrend since it gap-opened higher on Sept. 9, the first session after the S&P Dow Jones Indices said the company would be added to the S&P 500 Index, effective prior to the start of trading on Sept. 23. Commenting on the feat, Wedbush analyst Daniel Ives said, “The profitability profile of this story has significantly been bolstered with this another validation moment for the Palantir story.”
Although there was a ‘buy the rumor, sell the news’ moment after the inclusion, the stock has been grinding solidly higher since the start of October.
Source: Benzinga Pro
Meta Connects With Investors: After the early August broader market swoon set in motion by yen carry-trade unwinding, Meta’s stock found its feet shortly after and climbed higher until mid-August. The stock experienced a mild pullback that lasted through mid-September.
The two-day Meta Connect conference held on Sept. 25-26 saw the company announcing a slew of products and other offerings. These include AI-driven chatbots, an updated Llama large-language model, the latest Ray-Ban smart glasses with improved camera functionality, voice controls, and deeper integration with AI, Meta Quest 4, the next-generation virtual reality headset, and the Orion augmented reality glasses.
The stock has been on a steady climb since then.
Source: Benzinga Pro
Further Upside? The average analysts’ price targets, compiled by TipRanks, suggest modest upside potential for Meta but downside for Palantir.
| Current Price | 1-Year Average Analysts’ Price Target | Upside/Downside Potential | |
| Meta | $595.94 | $608.20 | +2.06% |
| Palantir | $40.01 | $27.67 | (-30.84%) |
The next big catalyst for Meta is likely to be the company’s third-quarter results due on Oct. 30, with the consensus modeling over 30% earnings per share growth and nearly 20% revenue growth. Meta’s fortunes to a large extent is tied to ad spending, which in turn hinges on macroeconomic conditions. With the Fed showing a proclivity to take rates down in the coming months, credit conditions could ease, potentially benefiting Meta.
Palantir is a favorite among retail investors. Continuing deal flow, and strong third-quarter results and positive fourth-quarter guidance could keep the upward momentum intact.
More importantly, the market has entered a seasonally strong quarter when a confluence of factors typically lifts the market. The stretched valuations, therefore, may not preclude further gains. That said, investors may remain wary of geopolitical and macroeconomic headwinds, with two wars ongoing and a hard-landing scenario still not off the table.
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