Jim Cramer Explains Why Palantir Fits the Speculative Category

Palantir Technologies Inc. (NASDAQ:PLTR) is one of the stocks Jim Cramer was focused on. Cramer commented that it is a speculative stock because it has a very high valuation. He stated:

“What [are] examples of what speculation means? Let me give you some categories. Alright, first, there are the richly valued stocks with real earnings like Palantir. Here’s a company that clients swear by because it aggregates data, uses artificial intelligence to find patterns that can turbocharge sales and earnings. People love this company. It’s also got a cybersecurity aspect. Palantir’s profitable, but the stock now sells for 277 times this year’s projected earnings. That’s why it’s speculative.”

Palantir Technologies Inc. (NASDAQ:PLTR) develops software platforms that help organizations integrate, analyze, and act on complex data for intelligence, security, and enterprise operations. During the September 9 episode, Cramer said that the stock can “supercharge your entire returns” for a long time, as he said:

“Everything changed when the stock of Palantir arrived. The defense-oriented software company that relies heavily on artificial intelligence saw its stock rally from… $35 a year ago to $162 today on the strength of a series of very strong reports that vastly exceeded projections. Real stuff. I’ve been around for a while, and… it really isn’t easy to spot new patterns, but as I say in How to Make Money in Any Market, the speculative plays do deserve a place in your portfolio. One, Palantir, which I continue to say will go above $200, can supercharge your entire returns and not just for days or months, but even for years.

When I saw the saga of Palantir unfold, I realized there’d been a sea change in this market. A new cohort of investors welcomes stocks with fantastic stories, and they keep buying those stocks for a long time after the news broke. Historically, good news would produce a ripple in a stock, but now it’s a flood, and it’s almost like an endless flood.”

While we acknowledge the potential of PLTR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.