Palantir Just Did The Unthinkable
Summary
Tom addresses the recent 53% decline in Palantir's (PLTR) stock price, dismissing the panic among investors as an overreaction to a misleading narrative. He firmly refutes the idea that Anthropic, a large language model (LLM) developer, is a threat to Palantir, likening LLMs to the 'brain' that produces intelligence, while Palantir's AIP foundry acts as the 'nervous system' that translates this intelligence into real-world operational outcomes. Tom emphasizes that these technologies are complementary, not competitive, and that selling Palantir into its current weakness is misguided.
He highlights Palantir's strong and improving financial fundamentals, which he believes are being overlooked due to market 'noise' and false narratives. Key metrics include 60% revenue growth over the past year, an impressive 355% growth in operating income (indicating rapidly expanding margins), and a 94% increase in free cash flow. Palantir boasts a strong balance sheet with $7-8 billion in cash and virtually no debt, alongside robust 2026 guidance and potential 100% revenue growth projected for 2027. Despite these strong indicators, the stock is currently trading at a forward P/E of 55 and only 6% above its lowest point for the entire year.
Tom draws parallels to 2022, when he personally 'doubled down' on Palantir as its price plummeted while fundamentals improved. He advocates for a consistent dollar-cost averaging (DCA) strategy, specifically identifying the current situation as 'double down territory.' He states he will continue buying heavily, specifically for as long as the stock remains below $165, viewing any price below this as a significant bargain. He urges investors to focus on long-term fundamentals over short-term volatility and market sentiment, noting that Palantir scores a high 98 on his Stock MVP scorecard, underscoring its fundamental strength.
Mentioned Stocks
Reasoning: Tom is very bullish on Palantir, viewing its current 53% price drop as an overreaction to a false narrative rather than a reflection of its strong fundamentals. He argues that large language models (like Anthropic) are the 'brain' producing intelligence, while Palantir's AIP foundry is the 'nervous system' that operationalizes this intelligence, making them complementary rather than competitive. Palantir exhibits robust financial health with 60% revenue growth, 355% operating income growth, and 94% free cash flow growth. The company holds $7-8 billion in cash with minimal debt, has strong 2026 guidance, and anticipates potentially 100% revenue growth in 2027. Despite a forward PE of 55, the stock is trading only 6% above its yearly low, which Tom considers a 'massive bargain'. He states he is 'going to be buying quite heavily' and 'doubling down for as long as the stock remains below 165' as part of his DCA strategy, reinforcing his personal conviction and action.