Could Arm Holdings and Applied Materials Overtake Palantir’s Valuation in 2025?
Palantir Technologies has seen its stock price soar 313% in 2024, pushing its market cap to a staggering $162 billion. However, its sky-high valuation, with a price-to-sales ratio of 63 and a trailing earnings multiple of 345, raises concerns. Wall Street analysts predict a 46% drop in Palantir’s share price over the next year, suggesting its valuation may be unsustainable.
While Palantir’s position in the rapidly growing artificial intelligence (AI) software market is undeniable, competition is intensifying. Could this pave the way for other companies, like Arm Holdings and Applied Materials, to surpass Palantir’s valuation in 2025?
Arm Holdings: Riding the Chip Wave
Arm Holdings, currently valued at nearly $148 billion, is already a major player in the global semiconductor market. Its chip architecture powers a vast array of devices, from smartphones to data centers.
Arm’s dominance in mobile applications, consumer electronics, and emerging markets like cloud computing and networking equipment positions it for continued growth. Its revenue is expected to jump 22% in fiscal 2025, driven by increasing demand for its licenses, particularly in AI-powered applications.
Analysts predict further acceleration in fiscal 2026, with revenue projected to increase 25% and earnings expected to surge 32%. Arm’s strong growth trajectory and potential to capitalize on AI’s expansion make it a compelling contender to overtake Palantir’s valuation.
Applied Materials: Benefiting from AI’s Hardware Demands
Applied Materials, valued at almost $151 billion, provides essential equipment and software for semiconductor manufacturing. While its 2024 performance saw modest growth, the company is poised for significant gains in 2025.
The booming demand for memory capacity in AI data centers, coupled with the transition to advanced chipmaking technology, presents a lucrative opportunity for Applied Materials. Its sales of DRAM equipment surged 60% in fiscal 2024, driven by AI’s insatiable appetite for memory.
Analysts anticipate Applied Materials’ revenue to surge 24% in 2025, fueled by continued AI-driven demand. Its forward earnings multiple of 19 suggests potential for further valuation expansion.
The Future Landscape
While Palantir’s position in AI software remains strong, the potential for competition and concerns surrounding its valuation raise questions about its future dominance. Arm Holdings’ dominance in chip architecture and Applied Materials’ crucial role in semiconductor manufacturing position them as strong contenders to surpass Palantir’s valuation in 2025.
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