Palantir Technologies and Reddit. Artificial Intelligence Companies Valuation

Dear Reader, 

Palantir Technologies, the artificial intelligence, big data analytics company, has become a top trending topic on Reddit’s WallStreetBets forum, right after GameStop.

Other artificial intelligence, cloud companies like Snowflake and C3Ai trade at close to100 times Price/Sales ratio. Palantir currently is valued at a Price/Sales ratio of approximately 50. Given the future promise of cloud artificial intelligence I forecast that Palantir's market capitalization could rise above 200 billion USD in 5 to 7 years.

Driven largely  by retail investors and the institutional investors that would follow them, Palantir's value could rise to 200 billion USD much sooner than that. All this is predicated on Palantir Technologies reaching profitability. If Palantir does not start earning money in the next 3 to 5 years, Palantir could end up fighting for its survival or struggle to stay a going concern.

I believe that global stock markets, mainly the US Nasdaq Composite and NYSE listed technology stocks are overvalued. Money printing by the Federal Reserve, The European Central Bank, The Bank of Japan, The Bank of England and other central banks has lead to asset prices inflation. Almost infinite amount of money is chasing a very limited amount of sound investment opportunities. This leads to almost every listed company looking like a good investment, given the almost zero or even negative interest rates on bank accounts and government bonds. Thus, we are living in the greatest stock market bubble in human history lead by technology stocks predominantly from the USA, but also from China and to a lesser extent from Europe. 


Without central bank money flowing into technology companies, I would say Palantir Technologies' market capitalization could rise to 200 billion USD in 12 years. And this is based on an assumption, that Palantir achieves a net profit margin of 20% in 5 to 7 years and artificial intelligence really brings about the fourth industrial revolution. Yes, many would say "Look at Amazon". But Amazon covered its expenses for a long time, even if barely. And now Amazon has its cloud business with which it makes profits and justifies to a certain extent its market capitalization.

The Federal Reserve is about to test how banks would cope with a 55 % fall in equity prices. I would say, that the Nasdaq Composite is overvalued by even more - by more than 60 %.

The bursting of the stock market, bond market and real estate bubbles would lead to a new Great Recession and economic suffering.

But until then, stocks' prices could go even higher.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich