Palantir’s pop bodes well for these other firms, UBS says
“Best-positioned to see AI pull-through.”
Palantir’s earnings-driven 34.4% romp last week was one for the ages, helping the software and AI contractor retake the top spot in the S&P 500 so far this year. (Palantir, which joined the index last September, rose 340% during 2024, making it the top-performing stock in the index.)
The Denver-based company’s robust 36% growth rate on revenues, driven in part by stronger-than-expected uptake of the company’s AI software offerings for corporate (that is, nongovernment clients), had Wall Street especially excited.
But investors are paying an insanely high premium for that growth, prompting one to wonder if there are other AI-exposed companies that might benefit from similar trends, but offer more compelling valuations.
To wit, analysts at UBS last week had this to say:
“The guidance for strong 54% US commercial revs growth in 2025 is a positive signal for primarily Databricks (according to our checks, Palantir and Databricks appear best-positioned to see AI pull-through) but to some degree Snowflake. In our view, Palantir’s success serves to validate the efforts of Databricks and Snowflake to expand into broader data intelligence platforms.”
Databricks isn’t much use to traders on the hunt for AI exposure at the moment because the company hasn’t yet gone public. But Snowflake, a cloud database services provider due to report earnings later this month, is listed and over the past year has been incredibly unloved compared to Palantir, given its exposure to some of the same trends.
On the other hand, Snowflake, unlike Palantir, is posting large losses that are expected to continue to grow over the next year, likely tempering optimism on the shares.
