Should Investors Buy Palantir Stock Instead of Microsoft Stock? | PLTR Stock | MSFT Stock

Parkev Tatevosian, CFA•Sep 15, 2026

Summary

Parkev provides a head-to-head comparison between Palantir and Microsoft, focusing on scale, growth, profitability, and valuation. Parkev notes that while Microsoft's revenue is vastly larger at $332 billion compared to Palantir's $6 billion, Palantir is growing three times faster. Parkev highlights that Palantir's operating profit margin has surged to 43%, nearly matching Microsoft’s 47%, which is impressive given the scale difference.

Parkev uses a discounted cash flow (DCF) model to determine fair values for both companies. For Palantir, Parkev calculates a fair value of $195, suggesting 15% upside from the current market price of $170. For Microsoft, Parkev calculates a fair value of $440, suggesting it is slightly overvalued at the current $492 price. Parkev concludes that while both are held in his personal portfolio, Palantir is the preferred choice for adding new capital at current levels.

PLTR: Parkev notes that Palantir's return on invested capital (ROIC) has improved to 38%, which is significantly higher than its weighted average cost of capital (WACC) of 13%. Parkev argues that the company is growing much more quickly than Microsoft and is seeing a sharp rise in operating margins. Parkev sets a fair value estimate for the stock at $195 and expresses a preference for adding to this position over Microsoft.

MSFT: Parkev considers Microsoft a "Hall of Fame" business with consistent performance and a solid 47% operating profit margin. However, Parkev points out that its ROIC has dropped to 26% as it invests heavily in AI data centers. Parkev calculates a fair value of $440 and suggests the stock is currently trading slightly above its fair value, though it remains a high-quality holding.

Mentioned Stocks

PLTR

Sentiment: BUYAction: RECOMMENDED

Reasoning: Parkev highlights Palantir's rapid growth rate, which is triple that of Microsoft. Parkev points out that Palantir's ROIC of 38% is nearly three times its WACC of 13%. Parkev calculates a DCF fair value of $195 against a market price of $170, predicting roughly 15% upside.

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MSFT

Sentiment: HOLD

Reasoning: Parkev identifies Microsoft as a 'Hall of Fame' business with excellent 47% profit margins. However, Parkev notes that heavy investments in AI are slightly lowering the ROIC to 26%. Parkev's DCF analysis yields a fair value of $440, making the current price of $492 look slightly overvalued.

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