Billionaire Israel Englander runs Millennium Management, one of the most profitable hedge funds in the world. Millennium returned 111% over the last three years, easily outperforming the S&P 500 (SNPINDEX:^GSPC), which returned 75% over the same period.
That impressive track record makes Englander a goodnd quarter, Millennium bought two artificial intelligence (AI) stocks, quadrupling its stake in Palantir Technologies (NASDAQ:PLTR) and doubling its stake in Astera Labs (NASDAQ:ALAB)
Missed AI’s “Act 1”? Act 2 Could Be 15x Bigger.Most investors think they missed the AI boat because they didn’t buy Nvidia in 2005. But according to our analysts, we’re only at the end of “Act 1″—the R&D phase. “Act 2” is the global rollout.Continue »
In the last two years, Palantir shares have advanced 405%, and Astera shares have added 575%. Is it too late to buy? Here’s what investors should know.
1. Palantir Technologies
Palantir develops data analytics and artificial intelligence (AI) platforms to help customers in the public and private sectors integrate data, identify actionable insights, and automate work. Some analysts view Palantir as the gold standard in enterprise AI due to its unique software architecture, and several companies are attempting to replicate parts of its business model.
Traditional analytics platforms are largely built around dashboards that tell customers what is happening. But Palantir built its software around a decision-making framework called an ontology, which helps customers decide what should happen next and execute that action directly within the platform. In short, Palantir actually connects data to operations.
In particular, Palantir should benefit as sovereign AI accelerates because its AI platform is a model-agnostic orchestration tool, meaning customers can swap large language models without rewriting the underlying applications. It also includes governance controls that protect sensitive business data by ensuring prompts and outputs cannot be retained by AI model developers for training purposes.
Palantir reported phenomenal financial results in the second quarter. Revenue increased 93% to $1.9 billion, marking the 12th consecutive acceleration, and non-GAAP net income increased 215% to $0.41 per diluted share. The company also reported a phenomenal Rule of 40 score of 155%.
Palantir currently trades at 155 times adjusted earnings. That is a very rich valuation, even when Wall Street expects the company’s earnings to increase at 56% annually through 2026. Most Wall Street analysts think the stock is undervalued — the median target price of $210 per share implies 12% upside from the current share price of $186 — but I think investors should wait for a better entry point.
