Palantir (PLTR) Unveils ‘Chain Reaction’: What the AI Infrastructure Push Means for Its Current Valuation

Palantir Technologies (PLTR) just launched Chain Reaction, a new operating system aimed at tackling AI’s power and compute crunch by linking energy producers, grid operators, and data centers into one coordinated infrastructure layer.

See our latest analysis for Palantir Technologies.

The launch of Chain Reaction caps a run of big wins, from multibillion dollar U.S. and U.K. defense deals to expanded government certifications. The market has taken notice, with Palantir’s 136.6% year to date share price return and 1 year total shareholder return of 147.6% signaling powerful, still building momentum despite some recent pullback.

If this kind of AI infrastructure story has your attention, it is worth scanning other innovators through high growth tech and AI stocks to spot what else could be compounding under the radar.

With revenue and profits now compounding and new platforms like Chain Reaction deepening its AI moat, the real question is this: is Palantir still mispriced, or is the market already baking in years of explosive growth?

Most Popular Narrative Narrative: 15.6% Overvalued

With Palantir last closing at $177.92 against a narrative fair value of $153.97, the story leans toward a premium price built on ambitious assumptions.

Based on a 5-year DCF valuation and very optimistic assumptions, I value Palantir today (Feb 2024) at around $89, while price is above $110. My updated assumptions:

Read the complete narrative.

Curious what kind of growth engine and profit profile could defend such a stretched gap between intrinsic value and market price? The narrative leans on compounding revenues, rising margins, and a future earnings multiple usually reserved for elite software platforms. Want to see exactly how those ingredients combine into that fair value target? Read on to unpack the full thesis.

Result: Fair Value of $153.97 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, stretched valuation and heavy reliance on flawless AI and defense execution mean that any growth stumble could rapidly compress multiples and challenge this bullish setup.

Find out about the key risks to this Palantir Technologies narrative.

Build Your Own Palantir Technologies Narrative

If this storyline does not fully resonate, or you would rather dive into the numbers yourself, you can build a custom view in under three minutes, Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Palantir Technologies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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