SA Asks: Is fan favorite Palantir in a bubble?

Palantir shares (NASDAQ:PLTR) have soared 90% year-to-date, making it the best-performing stock of the S&P 500 so far this year.

But is Palantir in a bubble? And, if so, is that bubble ready to burst?

Seeking Alpha analysts Geneva Investor and KM Capital weigh in.

Geneva Investor: I think the market views Palantir (NASDAQ:PLTR) as a new Mag7, driving its rich valuation. I wouldn’t bet against Palantir’s unique AI application layer positioning and proven scalability (rule of 40 above 80). I see it as a $1 trillion company in the making.

KM Capital: I do not think there is a bubble for a few reasons. The current P/E ratio is no doubt sky-high, but it is expected to shrink significantly over the next few years due to highly probable aggressive EPS growth.

Moreover, let’s not forget that Palantir (NASDAQ:PLTR) is at the forefront of the AI revolution, where new substantial growth catalysts might emerge unexpectedly, which will likely trigger upward EPS growth revisions from Wall Street. The stock, for example, recently saw a target price increase from highly reputable analysts at Wedbush. Additionally, global military spending is demonstrating growth, which will probably create new opportunities for the company’s government segment.

With that being said, I see robust positive factors that appear to be more fundamentally important than PLTR’s temporarily high P/E ratio.