Over the past year, numerous technology stocks have experienced significant gains, among which are Palantir Technologies and Reddit. Palantir’s shares have surged by more than 250% over the 12 months leading up to March 20, while Reddit’s stock has increased from a 52-week low of $37.35 last April to a remarkable high of $230.41 in February.
Currently, the climate might be favorable for investing in these companies. Recent fluctuations in the stock market, caused by uncertainty in the U.S. economy and the impact of tariffs initiated by Donald Trump, have led to declines in the stock prices of several companies, including Palantir and Reddit. Both stocks have decreased significantly from their 52-week highs reached in February.
Palantir is particularly well-equipped to benefit from the burgeoning artificial intelligence sector. The company has spent years developing digital tools that enable its software to interpret relationships across diverse data sets. The core of its AI Platform, known as the ontology, permits organizations to implement AI within mere days. This customer appeal has boosted Palantir’s sales, culminating in $2.9 billion in revenue at the end of 2024, marking a 29% growth compared to 2023. Palantir also reports strong financial health with a gross margin of 80% in 2024, leading to a net income increase to $468 million from $217 million in the previous year. Furthermore, Palantir is expanding into the manufacturing sector, a move highlighted by the 2024 introduction of Warp Speed, a product designed to enhance manufacturing efficiency through AI-powered management of supply chains and resources.
Similarly, Reddit has witnessed impressive stock appreciation, growing 165% over the past year due to strong business performance. The social media leader reported notable user growth in 2024, reaching 101.7 million daily active unique users, a 39% increase year-over-year. As a platform heavily dependent on advertising revenue, Reddit’s expanded user base enhances its earnings potential. In 2024, Reddit’s revenue surpassed $1 billion, achieving $1.3 billion in sales, a 62% increase from 2023. Reddit’s profitability is notable, too, with a gross margin of 90.5% in 2024, up from the previous year’s 86.2%. The company concluded the fourth quarter with a net income of $71 million, up from $18.5 million in 2023, although the full year concluded with a net loss of $484.3 million due to IPO-related costs. However, with high gross margins, Reddit is poised to maintain profitability moving forward.
As investors contemplate between Palantir and Reddit, their stellar 2024 performance underpins their respective share price surges. Both companies anticipate continued sales growth in 2025. Palantir projects its Q1 revenue to reach at least $858 million, reflecting a 35% increase from the previous year’s $634 million. Conversely, Reddit forecasts Q1 sales between $360 million and $370 million, marking at least a 48% increase from 2024’s Q1 revenue of $243 million.
Choosing between these technological stocks poses a challenge given their robust performance. However, an analysis of forward price-to-earnings (P/E) ratios could offer insight. Recent market volatility has lowered both Palantir’s and Reddit’s forward P/E multiples from February to March. Reddit’s forward P/E of 36 times is significantly lower than Palantir’s 156, indicating that Reddit offers better value. While both are well-managed and successful businesses, Reddit’s more favorable valuation may make it the preferred investment between the two at the current time.
