Are Palantir and Meta facing an AI crash? Tailwind from billionaires for Power Metallic Mines

Raw materials as down-to-earth alternatives with a future

In contrast to the hottest AI stocks on the market, commodity stocks often appear far more solid. Companies that mine raw materials or define deposits through exploration create tangible value - value that may or may not materialize with the next version update of one of the many large language models offered by AI vendors. The main drivers of demand for commodities are megatrends such as electrification. Copper benefits most from this, but nickel also stands to gain. Nickel is crucial for the energy density of batteries and an important component of stainless steel. According to the International Energy Agency (IEA), nickel production will be concentrated in only a few countries by 2030. Indonesia is expected to be the sole leader among the largest producing countries by the end of the decade, with a 62% share of the global market.** Given the experiences of recent years, companies dependent on nickel are likely to become increasingly alert to such dependencies.

Power Metallic Mines scores with size, geology, and prominent supporters

One company that offers nickel as well as numerous other metals on a single property is Power Metallic Mines. The Canadian company is best known for its Nisk project in Québec, where high-grade deposits of nickel, copper, and platinum group metals have already been identified. Following extensive drilling programs with strong results, Power Metallic has continuously expanded its land package and now holds around 213 km² of land – an increase of 600%. The deposit has caught the attention of geologists because its key parameters are comparable to legendary Nordic deposits such as those in Norilsk, Russia. CEO Terry Lynch emphasized that, with regard to Nisk, the area could potentially host several profitable mines.

That these key figures are more than just vague hopes based on a handful of good drilling results is also demonstrated by Power Metallic Mines' most recent financing round a few months ago. At that time, the Company secured CAD 50 million from investors for a 100,000-meter drill program. Among the backers were a number of well-known mining billionaires such as Robert Friedland and Rob McEwen. As if the list of prominent supporters and the key data on Nisk were not enough, the Company also scores points with its ESG approach. For example, in the event of later production, Nisk's energy supply is planned to be generated in an almost climate-neutral manner. The management team around CEO Terry Lynch has also already looked into climate-friendly equipment.

AI valuations reach dizzying heights - What is next for Palantir and Meta?

With a market capitalization of around CAD 200 million, the enormous Nisk project is valued at only a tiny fraction of what leading AI stocks command today. Palantir, with a valuation of more than USD 370 billion, and Meta, at roughly USD 1.5 trillion, play in an entirely different league. While both companies generate significant profits and operate at crucial intersections of the AI ecosystem, it remains uncertain whether they can extend their exceptional growth trajectories indefinitely. Palantir's P/E ratio alone, which has now reached a value of around 250, is likely to remind many experienced investors of the hype surrounding the Neuer Markt.

Not all that glitters is gold at Meta either: despite growing revenues from the use of AI in advertising, Meta is also seeing sharply rising costs. High investments in data centers and research, which according to Reuters are expected to reach between USD 66 billion and USD 72 billion in 2025, are weighing on earnings. More and more analysts are pointing out that the enormous expenditure on AI raises questions despite its successes. There is growing concern that the benefits of further investment will eventually decline significantly. However, it is only possible to know when this point has been reached in hindsight, which is a deceptive starting point for investors. In addition, regulatory pressure is growing: Meta is facing antitrust and data protection proceedings in Europe. A recent ruling in Spain imposed a fine of around EUR 550 million for data misuse in the advertising business. Consumer and data protection advocates are also targeting large tech companies in other areas.

Good arguments in favor of Power Metallic Mines shares

Although AI stocks such as Palantir and Meta are currently in a league of their own, their valuations have reached unprecedented heights. Commodity stocks like Power Metallic, by contrast, appear far more grounded thanks to the tangible resources in the ground. The Nisk project benefits directly from the megatrends of decarbonization and electrification, and is also located in the heart of Canada. The polymetallic deposit is rightly considered very promising. With its strong roster of prominent investors, Power Metallic Mines could prove more appealing to long-term investors than many ambitiously valued AI stocks, even if the AI boom continues.