Wall Street Showdown: Assessing PLTR vs. META for AI Growth Stock Dominance

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By Ronald Tech

The Palantir Perspective

The rise of Palantir Technologies (PLTR) in 2023 as an AI-centric growth stock has been a roller coaster of excitement and skepticism. While the company’s newly launched Artificial Intelligence Platform (AIP) has gained traction and government contracts have bolstered its revenue stream, analysts remain wary of the hype fueling its stock surge. Wall Street’s mixed bag of ratings indicates a lack of consensus, with some expressing caution over the company’s ability to translate AI potential into substantial revenue.

Diving into Palantir Technologies Stock Performance

Palantir, known for meeting the data analysis needs of private companies and governments, recorded a robust 17% year-over-year revenue jump in Q3 2023, alongside reporting GAAP profits for the fourth consecutive quarter. Strategic alliances and a significant cash balance point to a company well-positioned to capitalize on AI-related partnerships. However, with recent downgrades citing inflated valuation due to AI hype, the stock has elicited a mixture of confidence and caution on Wall Street.

Wall Street’s Take on Palantir Stock

With a consensus “hold” rating and divergent target prices, the market’s sentiment toward Palantir stock remains ambiguous. The company’s lofty valuation raises questions about its ability to deliver substantial revenue growth and justify its stock performance, creating a tug-of-war between its AI potential and market skepticism.

The Meta Platforms Picture

Meta Platforms (META), previously known as Facebook, reigned supreme within the “Magnificent Seven” cadre of U.S. tech giants in 2023. Fueled by the AI rush and a commitment to advancing AI research, Meta’s stock soared 184%, eclipsing the S&P 500’s gain.

Assessing Meta Platforms Stock Performance

As a titan in the social media sphere, Meta’s evolution beyond social platforms into a vast digital ecosystem presents a plethora of growth opportunities. From immersive gaming experiences to e-commerce integrations, Meta’s ambition to engender deeper user engagement has positioned it as a formidable player in the AI-fueled market.

Meta Platforms Inc. Continues to Surge in Q3 With Record-Breaking Performance

Meta Platforms Inc. Continues to Surge in Q3 With Record-Breaking Performance

Meta Platforms Inc., formerly known as Facebook, has reported outstanding financial results for the third quarter of 2023. The company witnessed a substantial 23% year-on-year surge in revenue, amounting to an impressive $34.1 billion. Moreover, its diluted earnings per share (EPS) soared by a remarkable 168% to $4.39. The stellar performance can be attributed to the robust growth of Meta’s Family of Apps (FoA) segment, which experienced a 24% revenue increase and an 87% surge in operating income during the quarter.

The Impact of Meta’s Social Media Platforms

Meta’s large user base and extensive data reservoirs are proving to be magnets for advertisers, as evidenced by a significant 23% rise in advertising revenue, reaching $33.6 billion in the quarter. This underscores the allure of Meta’s social media platforms to businesses seeking to reach and engage with a vast and diverse audience.

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The AI and Metaverse Focus

At the September’s Connect Conference, Meta’s CEO Mark Zuckerberg unveiled the company’s AI offerings, emphasizing its commitment to AI investments in the current year. The unveiling included innovations such as Quest 3, AI-powered Ray-Ban smart glasses, and the AI Studio platform, signifying Meta’s dedication to pushing the boundaries of technological advancements.

Furthermore, despite substantial investments in AI and the metaverse, Meta closed the quarter with a substantial free cash flow (FCF) balance of $13.6 billion, highlighting its ability to fund innovation and expansion while maintaining robust financial health.

Future Projections and Analyst Sentiment

Looking ahead, analysts are optimistic about Meta’s prospects, forecasting another record-breaking year in 2024. The projected revenue for 2024 is anticipated to rise by 13% year-over-year to $151 billion, with earnings expected to reach $17.40, reflecting a 21% increase from 2023.

Moreover, industry analysts anticipate that Meta could generate over $60 billion in free cash flow for 2024, potentially propelling its stock to reach $473. The current trading valuation of Meta, at approximately 20 times the estimated 2024 earnings, is deemed favorable given the company’s promising AI endeavors in the years to come.

Wall Street’s View on Meta Stock

Analysts have prominently endorsed Meta Platforms stock, conferring it with an overall “strong buy” rating. Among the 41 analysts covering the stock, the majority have assigned it a “strong buy” designation, affirming their confidence in Meta’s future growth potential.

The average target price for META is estimated at $386.24, indicating an 8.9% increase from the current trading levels, underlining the widespread positive sentiment among financial experts.

META or PLTR: Which is the Best AI Growth Stock?

In considering Meta Platforms Inc. and Palantir Technologies, while Wall Street’s preference is transparent, both companies are positioned as strong long-term investments, given their shared focus on artificial intelligence-driven innovation.

Nonetheless, if pressed to choose between the two, Meta Platforms offers compelling growth prospects in AI and the metaverse, with diverse potential applications spanning from social networking to immersive experiences and e-commerce. Envisioning Meta’s 2024 performance as even more robust, it appears poised to reach the Street-high target price of $435, indicating a substantial 22.6% upside potential over the next 12 months.