Jim Cramer - Mad Money Palantir Technologies PLTR-Q RISKY May 14, 2025

Loves it. Cutting edge and a leader in the defence space. But the valuation is too high (192x forward PE). He's been watching it a long time. He missed this completely.

Yes, their fundamentals are great, but the valuation is too high. Maybe will enter on a pullback.

He just bought it, even though its valuation is very high (192x forward PE). Earnings were fantastic. He likes what they're doing in the commercial side, up 70% YOY, and not just relying on government contracts. They have to grow into their high multiple and it is volatile.

Well-run, and produces superior technology that pays for itself almost immediately. They have a strong defence business. Growth and margins are expanding. But shares trade at 220x earnings--ridiculously expensive. But traders don't care. PLTR is the most successful speculative stock. He targets $200, seriously. Take profits before you get hurt, because someone always does in a spec stock.

One of his most tech-savvy friends described PLTR to him: consulting with AI. Often takes data from multiple, disparate sources, pulls it together, and lets the analytics take over. Very cool YouTube videos :) 

There is no fundamental grounding for this stock whatsoever. It's a story stock, a cult stock. There are no valuation parameters to make sense of what you're paying for it. Astronomically expensive.

At 205X earnings, the stock is vulnerable to sentiment swings, as we saw on Thursday with politicians worrying about it having 'too much power'. In a way, though, this exemplifies how well it has done, and its potential moat. It seems to have a better AI/data mousetrap, and can solve company and government problems effectively and cheaply. We admire what the company has done and its growth and its outlook potential. BUT....it has also become somewhat of a 'cult' stock. The CEO is brilliant, but also perhaps a little crazy (not necessary in a bad way!). Everyone loves it right now, but this is dangerous if the love affair goes the wrong way or a company problem develops. Even at half the valuation, it is still very expensive. So investors we think need to be prepared, as this is a stock that could decline 50%, pretty much overnight, on some bad news. We think sizing a position correctly to reflect this makes sense, and trimming into more declines to maintain a position, but also to manage risks. We do think it will be higher in five years: but it may be all over the map during that time.
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A note regarding shock events: Going back to the 1940's the average return after a shock event is up 7 1/2% 12 months later. She sees good growth with its powerful AI centres and increasing revenue. It is in the volatile tech space and trades at a premium of 60X earnings. It has long term contracts with revenue growth of 40% year over year. However she sees a downside price of 25% and there has been some insider selling.

Forget what you paid for something, as that's anchoring to the past. Loves the products, they're spookily clever. But the PE is 200x, so you have to believe that growth continues for 10-20 years without competition or economic slowdown. Be mindful of position size, given the valuation. Businesses can compress their multiples quite easily, without the news getting bad.

He'd take more than a little off the table.