Brent Thill, a Wall Street analyst at Jefferies, has contrasting views on Palantir Technologies and Amazon. He recommends selling Palantir and buying Amazon based on his analysis of their performance and future prospects. Palantir reported strong fourth-quarter earnings, beating estimates on revenue and net income.
The company’s customer base grew by 43% to 711, with existing customers spending 20% more. Revenue increased by 36% to $828 million, and net income surged by 75% to $0.14 per diluted share. Palantir’s strong performance is driven by its dominance in the AI platforms market.
However, Thill raised concerns about Palantir’s high valuation. He set a target price of $60 per share, suggesting a 49% downside from its current price of $117. Thill points out that Palantir’s forward price-to-sales ratio of 56 is unsustainable, comparing it to Snowflake, which saw a 70% stock drop despite robust sales growth.
Thill’s contrasting view on valuations
Amazon also had a strong quarter, with revenue increasing by 10% to $188 billion, fueled by cloud and advertising services. Net income surged by 86% to $1.86 per diluted share, partly due to efficiencies in logistics and inventory management.
Despite solid results, Amazon’s guidance for the upcoming quarter fell short of expectations, forecasting a 7% revenue increase and a 5% rise in operating income. These projections led to a decline in Amazon’s stock following the earnings report. Thill remains bullish on Amazon, setting a target price of $275 per share, indicating a 20% upside from its current price of $230.
He argues that temporary financial headwinds will ultimately result in strong sales growth and higher margins. Thill emphasizes Amazon’s significant presence in e-commerce and cloud markets, particularly Amazon Web Services, which holds a 50% market share in cloud computing. Thill’s optimistic outlook on Amazon aligns with broader Wall Street sentiment.
Amazon’s median target price of $270 per share reflects a 17% upside, while Palantir’s median target price of $96 per share suggests an 18% downside. Investors might consider rebalancing their portfolios based on Thill’s insights, potentially selling Palantir shares and acquiring Amazon stock as part of a strategic investment approach.
