Should You Buy Palantir Before May 5?

Why are both the government and businesses flocking to this tech company? Palantir has long been recognized for its software platform, which helps customers aggregate and make better use of their data. But about two years ago, it launched its Artificial Intelligence Platform (AIP), which harnesses AI to optimize the power of a customer’s data.

For example, AIP could help the military swiftly survey a danger zone, anticipate situations, and develop effective action plans. In the commercial arena, it might help a customer better organize its operations or distribution of a product to avoid waste. And these are just a couple of quick examples. The platform is far-reaching, offering game-changing possibilities for many businesses and government projects.

So, it’s easy to understand why Palantir has seen growth take off. The company is optimistic about what’s to come, most recently predicting first-quarter revenue of as much as $862 million. That represents a year-over-year increase of about 35%. And the company expects adjusted income from operations to climb as much as 58%.

If, on May 5, Palantir meets or beats its first-quarter forecast and offers investors comforting words regarding its growth in the months to come, the stock could jump. That said, expectations are high, and investors are on edge today amid uncertainty about Trump’s tariff plan. If Palantir’s earnings or forecast disappoint, the shares could tumble.

So, rushing out to buy Palantir before May 5 to potentially benefit from earnings news is a bet on the short term, and that’s risky. But here’s the good news: If you zoom out and take a long-term view, you don’t have to time your purchase of this or any other stock. Investors who buy Palantir today or a month from now and hold on for a number of years won’t see much of a difference in their returns, as short-term fluctuations generally have little impact on stock performance over five or 10 years.

Now, here’s the next question: Should you buy Palantir? This stock looks expensive by many valuation measures, but the forward price/earnings-to-growth (PEG) ratio, which accounts for growth, shows it could be a reasonable buy at today’s level of 0.9. A level of 1 or higher suggests a stock is overvalued.

Ultimately, though, the decision whether to buy Palantir depends on your investment style. Value investors surely should skip it, but aggressive tech investors who don’t mind paying a bit more for a top-performing company may scoop up a few shares today — and keep this player in their portfolio for the long haul.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

Should You Buy Palantir Before May 5? was originally published by The Motley Fool