Considering an Alternative Investment: Could This Millionaire-Creating Stock Be a Better Choice than Palantir Technologies?
Considering an Alternative Investment: Could This Millionaire-Creating Stock Be a Better Choice than Palantir Technologies?
Currently, Palantir Technologies might be the hottest commodity on Wall Street's stock market, with its AI software showing remarkable growth. The market, both public and government sectors, presents an extensive opportunity for the company. The stock has skyrocketed approximately 800% since the start of the previous year.
However, investors should exercise caution, as stock prices can sometimes surge to extreme levels. In fact, Palantir's valuation has surpassed 50 times the company's revenue, making it questionable in value.
Consider ASML as an alternative AI stock. ASML plays a crucial role in manufacturing the advanced chips that drive AI technology. Despite facing geopolitical challenges, these problems have suppressed its share price, providing a great opportunity for long-term investors.
Palantir's Soaring Stock Price is Cause for Concern
While Palantir's business is thriving, its stock price is an area of concern. The company's data analytics software has gained widespread popularity across government and enterprise clients, and its AI platform, which assists businesses in deploying AI applications, has contributed to the company's growth. Palantir reported a 30% annual revenue increase in the third quarter, further fueling investor enthusiasm.
However, despite the impressive growth, the stock has seen a significant increase in value since its lows nearly two years ago. In fact, its current price-to-sales ratio surpasses its "Everything Bubble" levels from 2021, a stock market bubble born from the effects of zero-interest-rate fiscal policies following the COVID-19 pandemic.
This trend is unlikely to continue. Historically, stocks don't maintain such high valuations for extended periods, and either years of stagnant performance or a sudden downturn would be necessary to bring Palantir's valuation back into check. In other words, it may not be the optimal time to invest fresh capital in the company.
ASML - A Potentially Millionaire-Making Stock on the Decline. Why Buy?
Meanwhile, ASML has trended downward since reaching its peak in July. ASML designs and manufactures specialized equipment, known as lithography machines, for semiconductors (chips). As the only company providing extreme ultraviolet lithography (EUV) machines required for manufacturing high-end chips such as those utilized in AI data centers, ASML maintains a monopolistic position in the industry.
Due to its dominance in lithography, ASML has consistently delivered stellar returns for investors since the 1990s, significantly outperforming the S&P 500. Long-term ASML stock holders have likely experienced life-altering wealth, potentially even achieving millionaire status.
However, ASML has experienced a nearly 40% drop from its high, primarily as a result of geopolitical tensions between China and the United States. China, ASML's primary market (accounting for nearly half of its revenue in Q3), and the United States have been pressuring the company to limit its business with China due to national security concerns. ASML's Q3 earnings revealed a revised 2025 revenue projection, lowering the prior range of 30 billion to 40 billion euros to 30 billion to 35 billion euros.
Why Purchase the Stock Now?
Despite the valid concerns surrounding geopolitical tensions and their impact on ASML's earnings, it is likely that these conflicts will eventually subside. ASML's monopoly on EUV machines, coupled with the growing demand for chips globally, will ensure that the company will have ample opportunities to capitalize on the market.
Additionally, the stock currently trades at a P/E ratio of 32, which is below its historical average of 37. It's uncommon to find dominant companies trading at discounted valuations in today's market, making ASML a potentially safer investment compared to Palantir, which has transformed into a speculative bubble.
Investors might want to reconsider their approach towards Palantir's stock, given its high valuation. With its price-to-sales ratio surpassing "Everything Bubble" levels, the stock's continued growth seems unlikely and may not offer the best investment opportunity at the moment. On the other hand, ASML's Downturn presents an opportunity for long-term investors. Despite geopolitical challenges, ASML's position as the only provider of extreme ultraviolet lithography machines ensures consistent returns in the long run, making its current P/E ratio of 32 a potential bargain compared to Palantir's speculative bubble.