Palantir Technologies (PLTR) and MicroStrategy (MSTR) delivered jaw-dropping returns in 2024. These companies have seen their shares skyrocket more than 350% year-to-date, driven by significant tailwinds.
Palantir stock has surged over 369%, reflecting the demand for its artificial intelligence (AI) solutions. Known for its expertise in data analytics and software, Palantir has successfully expanded its reach across key sectors, positioning itself as a top player in the AI-driven software space.
Meanwhile, MicroStrategy’s remarkable 440% rally can be attributed to its strategic bet on Bitcoin (BTCUSD). As the largest publicly traded holder of the cryptocurrency, MicroStrategy’s fortunes are closely tied to Bitcoin’s rising value. The bullish crypto market and the company’s growing holdings have catapulted its stock to new heights.
While these stocks have delivered extraordinary returns, their meteoric rise has also driven up their valuations. This naturally raises the question: Are these 2024 stars still a buy in 2025?
Palantir’s AI Leadership Promises Growth, But Valuation Raises Red Flags
Palantir has solidified its position as an AI-driven data analytics and software leader. With accelerating revenue growth, solid margins, a robust balance sheet, and high demand for its Artificial Intelligence Platform (AIP), the company is poised to deliver strong financials in 2025.
AIP’s scalability and adaptability have fueled widespread adoption, with Palantir securing a significant number of deals worth over $1 million. This drove its total contract value higher, which stood at $1.1 billion at the end of the third quarter.
With revenue streams spanning government and commercial markets, Palantir enjoys a diverse customer base that boosts its resilience. Government agencies, particularly in defense and intelligence, remain key clients, while commercial customers contribute to sustained growth. High customer retention across both sectors further reflects Palantir’s ability to effectively meet market demands.
Palantir’s financial strength further supports its growth trajectory. The company had a record $1 billion in trailing 12-month free cash flow (FCF) and $4.6 billion in cash and investments. This solid liquidity positions the company well to accelerate its growth through accretive acquisitions and reinvest in research and development.
However, Palantir’s valuation is a key concern. With a sky-high price-sales ratio of 65.7x, well above industry peers, analysts suggest a “Hold” consensus rating.
The company’s leadership in the AI-driven software market and solid financial health signal a promising future. However, its elevated valuation could limit upside potential or lead to volatility, especially if growth begins to taper.
MicroStrategy: The Bitcoin Bet Is Paying Off, But Can It Last?
MicroStrategy has transformed from a software company into a hybrid tech investment firm. This shift has been met with positive reactions from investors, as the company's future growth is closely tied to the performance of Bitcoin.
MicroStrategy is raising billions to further bolster its Bitcoin holdings over the next three years. The cryptocurrency’s fixed supply and growing global adoption will likely drive its long-term value. Further, an expected decline in interest rates in 2025 could boost Bitcoin prices, positively impacting MicroStrategy’s stock performance.
Institutional interest in Bitcoin is on the rise, making the digital currency's future even more promising. With new financial products like spot exchange-traded funds (ETFs) being introduced, Bitcoin is gaining credibility as a legitimate asset. MicroStrategy, with its substantial Bitcoin holdings, stands to benefit from this growing wave of interest.
While Bitcoin remains a central focus, MicroStrategy is also working to strengthen its software business, mainly through its cloud offerings. The company is witnessing a solid growth in subscription billings, signaling strong demand for its cloud platform.
MSTR’s growing Bitcoin holdings and strength in the software business position it well to deliver notable returns in the coming years. Wall Street is optimistic about the company’s Bitcoin Strategy, with a consensus rating of “Strong Buy,” signaling confidence in its ability to maintain momentum through 2025.
The Verdict: High-Risk, High-Reward
Palantir and MicroStrategy have delivered extraordinary returns in 2024. Palantir’s dominance in AI and MicroStrategy’s Bitcoin strategy are impressive and could continue to drive their financials. While these stocks could offer substantial gains, they could be significantly volatile. Further, their high valuations raise questions about future upside potential.
