Meta stocks pale next to Peter Thiel’s secretive data company, even as Mark Zuckerberg’s AI advances generate excitement

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Meta Platforms, Inc. (NASDAQ:META) and Palantir Technologies, Inc. (NYSE:PLTR) is among the AI ​​stocks that posted strong gains in early to mid-September. While the former is perched at an all-time high, the latter, despite its recent strong run, has yet to recover its January 2021 peak.

Here’s a look at the relative performance of these two stocks and what’s in store for them in the short term:

Meta vs. Palantir: Meta has gained over 68% year-to-date, while Palantir is up 133%. The data analytics company co-founded by Peter Thiel is the fourth-best performing S&P 500 company this year, while Meta, co-founded by Mark Zuckerberg, holds the 11th spot on the list.

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Both stocks outperformed the broader market represented by the SPDR S&P 500 ETF Trust (NYSE:SPY) — an exchange-traded fund that tracks the S&P 500 index.

Valuations of both stocks have become expensive following the recent rally. The forward price-to-earnings ratio for Palantir currently stands at 95.2, but the Meta trades at a more modest forward P/E valuation of 24.75. The social media giant’s P/E ratio is quite in line with 21.3, which is applicable to the communications services sector.

The Palantir Rally: Palantir has been on an uptrend since opening a gap higher on Sept. 9, the first session after the S&P Dow Jones Indices said the company would be added to the S&P 500, effective before trading began on Sept. 23. Commenting on the feat, Wedbush analyst Daniel Ives said, “The profitability profile of this story has been significantly strengthened with this other moment of validation for the Palantir story.”

While there was a “buy the rumor, sell the news” moment after the listing, the stock has risen solidly since early October.

Meta connects with investors: After the broader market swoon in early August, set in motion by the unwinding of the yen trade, Meta shares found their feet shortly thereafter and climbed higher into mid-August. The stock experienced a mild pullback that lasted until mid-September.

The story continues

The two-day Meta Connect conference held on September 25-26 saw the company announce a slew of products and other offerings. These include AI-based chatbots, an updated Llama model with a large tongue, the latest Ray-Ban smart glasses with improved camera functionality, voice commands and deeper integration with AI, Meta Quest 4, the virtual reality headset state-of-the-art and Orion Glasses for augmented reality.

Since then, the stock has been on a steady rise.

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Higher up? Average analyst price targets, compiled by TipRanks, suggest modest upside potential for Meta, but downside for Palantir.

The next big catalyst for Meta will likely be the company’s third-quarter results due on October 30, with consensus modeling a more than 30% increase in earnings per share and a nearly 20% increase in revenue. Meta’s wealth is largely tied to advertising spending, which in turn depends on macroeconomic conditions. With the Fed showing a tendency to cut rates in the coming months, credit conditions could ease, potentially benefitting Meta.

Palantir is the favorite of retail investors. Continued deal flow and strong third-quarter results and positive guidance for the fourth quarter could keep the upside momentum intact.

More importantly, the market entered a strong seasonal quarter when a confluence of factors typically lifts the market. Therefore, stretched valuations cannot rule out additional earnings. That said, investors may remain cautious about geopolitical and macroeconomic headwinds, with two ongoing wars and a hard landing scenario still off the table.

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This article Meta Stock pales next to Peter Thiel’s secret data company, even as Mark Zuckerberg’s company’s AI advances generate excitement originally appeared on Benzinga.com