Prediction: 1 Dirt Cheap Warren Buffett Stock That Will Be Worth More Than Palantir By 2030

Despite some volatility earlier in the year, 2025 has shaped up to be another impressive year for artificial intelligence (AI) stocks. Per usual, data analytics platform Palantir Technologies (NASDAQ: PLTR) has remained one of the best AI stocks -- with shares surging 130%.

One sector that has been relatively weak this year, however, is health insurance. Among notable laggards is UnitedHealth Group (NYSE: UNH), whose share price plummeted by 36% so far this year -- making it the poorest-performing stock in the Dow Jones Industrial Average (DJINDICES: ^DJI).

Despite these lackluster returns, Warren Buffett decided to buy the dip in UnitedHealth Group earlier this year -- adding roughly 5 million shares to Berkshire Hathaway's portfolio.

Let's unpack why Palantir's historic rally may come to an end sooner than investors realize. In addition, I'll explain the factors that caused UnitedHealth Group to sell off in the first place and make the case for why the stock looks like a bargain right now.

Image source: Getty Images.

Palantir stock is on an epic run, but history is calling for a correction

If the snapshot below is any indication, the AI revolution has been a transformative catalyst for Palantir. Over the last three years, the company's AI-powered software suite -- comprised of the Foundry, Apollo, and Gotham platforms -- has witnessed exponential demand from both government agencies and private sector enterprises.

Data by YCharts.

Moreover, Palantir's transition to profitability underscores how lucrative the AI market has been for the data mining darling. These positive -- and improving -- unit economics help Palantir stand out in a fiercely competitive software landscape. The company has done a stellar job rivaling larger incumbents like Salesforce and SAP, and its operational momentum doesn't appear to be slowing down.

While I can applaud Palantir's business performance, my reservations stem from something else entirely: Valuation.

Data by YCharts.

In the analysis above, I've benchmarked Palantir against a comprehensive cohort of leading software businesses. Not only is Palantir's price-to-sales (P/S) ratio of 114 magnitudes higher than any other company in the peer group, but it's also expanding at a notable pace.

Generally speaking, as valuations soar, so do investor expectations. This can be a hard needle to thread in the long run because even if Palantir delivers a blowout quarter, the company increasingly faces the risk of not delivering on lofty -- and likely unrealistic -- expectations. As a result, the stock could enter a prolonged sell-off.

Moreover, Palantir's current valuation multiples far exceed what investors witnessed during the dot-com bubble in the late 1990s. In my eyes, it's this relationship that may have inspired famed hedge fund investor Michael Burry to short Palantir.

Although Palantir could still be a long-term winner of the AI revolution, I think shares face the risk of a pronounced correction. It could take years before Palantir stock climbs back (or above) its current valuation.

Over the next five years, I think Palantir stock could normalize quite dramatically as a valuation de-rating seems almost inevitable at this point.

UnitedHealth Group's business woes are a buying opportunity

UnitedHealth's downward spiral occurred earlier this year after the company reduced its financial guidance. The cause behind the company's lower earnings forecast had two influences:

1. Utilization rates in UnitedHealth's Medicare Advantage business were higher than expected.
2. The company's pharmacy and care delivery subsidiary, Optum Health, is struggling from a combination of low engagement in certain markets as well as higher-than-anticipated costs for patients due to Medicare funding cuts.

Although it may take several quarters for investors to start seeing a return to accelerating revenue and earnings growth, UnitedHealth's sell-off may have been overblown. My reasoning for this is that the company's price-to-earnings (P/E) multiple of 16.8 is hovering near five-year lows. Despite its operational turbulence, UnitedHealth's cratering valuation dynamics seem a bit exaggerated given the company still provides a mission-critical service in health insurance.

Data by YCharts.

Moreover, I think UnitedHealth could wind up being a stealthy beneficiary of AI over the next several years. Large language models (LLMs) have the ability to scan medical bills as well as digest volumes of ever-changing legislation in real time. These capabilities could prove useful in forecasting important business functions, such as utilization rates broken down by geographic and age demographics.

Lastly, in the midst of UnitedHealth's sell-off, several insiders were buying the stock alongside Buffett. The combination of a turnaround plan, insider buying, Berkshire's institutional approval, and the potential tailwinds of AI makes a compelling setup for a bounce back in UnitedHealth over the next several years.

Is UnitedHealth stock a buy right now?

As of this writing, UnitedHealth boasts a market capitalization of $291 billion -- about 43% below Palantir's market value.

While that's a meaningful disparity, I think UnitedHealth has the right mix of appropriate investor expectations combined with macro tailwinds that could ignite a period of robust valuation expansion. By contrast, Palantir is trading at unsustainable levels and appears due for a healthy pullback.

Against this backdrop, I think UnitedHealth stock is a rare combination of both growth and value in an otherwise frothy stock market. For these reasons, I see UnitedHealth Group as a no-brainer opportunity for investors with a long-term horizon.

Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends Atlassian, Berkshire Hathaway, Cloudflare, CrowdStrike, Datadog, MongoDB, Palantir Technologies, Salesforce, ServiceNow, Snowflake, Workday, and Zscaler. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy.