Palantir – Data as gold, or should one add Desert Gold and MicroStrategy to the portfolio for 2025?

Palantir – A meteoric rise

Palantir Technologies has established itself as a specialist in processing vast amounts of data and is considered a sought-after data analysis company. With its two main products, Palantir Gotham and Foundry, the Company covers both the public and private sectors. While Gotham is mainly used by government organisations such as intelligence or military agencies, Foundry is used in industries such as healthcare or logistics. The focus on government customers is striking: around 55% of revenues come from long-term contracts with public institutions. Commercial customers contribute the remaining 45%.

Despite an impressive performance, there is reason for skepticism. The extremely high valuation of the share has attracted particular criticism: with a price-sales ratio of over 70, many analysts see the stock market valuation as being on shaky ground. Added to this is the strong competition from technology giants such as Google and Amazon, which are also entering the data analysis market. In analyst circles, there is a predominantly cautious to negative sentiment toward the stock. Due to its rapid rise, many consider the stock overvalued; however, the same was said when it was trading at USD 35.

Compared to the S&P 500, Palantir shares have significantly outperformed the index, with a price increase of around 380%. The hype is mainly due to the growing importance of AI in its products and its successes in both business areas. But despite the euphoria, experts are taking a critical look at the figures: the market capitalization of around USD 172 billion is disproportionate to the actual profit growth. Many experts are therefore advising investors to exercise caution. The stock is currently trading at USD 75.63. A 20% correction should be awaited before entering the market.

Desert Gold - Record Prices and Lucrative Opportunities for Investors

The year 2024 was very positive for the gold market, with the price of gold rising by around 35% from the beginning of the year to a current level of USD 2624.20. This trend was largely supported by geopolitical tensions, economic uncertainties, key decisions by the Federal Reserve, and extensive gold purchases by central banks. In the wake of this upturn, explorers such as Desert Gold are attracting attention. The Company is focusing on its promising SMSZ project in Mali, which covers 440 km2 and where around 1.1 million ounces of gold have been identified to date. So far, only a fraction of the property has been explored, offering further growth potential.

To date, 25 additional gold zones have been identified by drilling but are not yet included in the current resource estimate. The direct neighbourhood of large gold producers such as Allied Gold in the north or Endeavour Mining fuels latent takeover speculation. In late November, Desert Gold reported significant progress at its SMSZ project. According to CEO Jared Scharf, the latest drilling results have brought the Company a big step closer to the 2 million ounce gold target. At its peak, the gold grades were 6.35 g/t. The new preliminary economic assessment (PEA) for the two open-pit mines, which are to be operated using the heap leaching method, is planned for early 2025.

If production starts, it would be a decisive step for further exploration programs. Another positive development for Desert Gold Ventures is the appointment of Mr Diallo, an experienced professional with more than 15 years experience in mineral resource exploration in West Africa. He will help the Company overcome strategic and geological challenges, while Don Dudek, the former director, will remain with the Company in an advisory capacity. The stock is currently trading at CAD 0.06, resulting in a market capitalization of approximately CAD 14.5 million. Assuming only the 1.1 million ounces, one ounce is valued at CAD 13.20 or the equivalent of USD 9.18. Considering the additional 25 untapped gold zones, the valuation per ounce could be significantly lower.

MicroStrategy - Bitcoin superpower

MicroStrategy, founded in 1989, started out as an innovative provider of business intelligence software and celebrated its first major successes with an IPO in 1998, in the midst of the dot-com euphoria. But what began promisingly took a sudden turn: after the bubble burst in 2000 and a financial scandal erupted, the share price plummeted. The SEC took a close look at the Company, and heavy fines followed. But the crisis led to a remarkable realignment: under the leadership of CEO Michael Saylor, MicroStrategy transformed itself from a pure software company to one of the most prominent Bitcoin investors worldwide.

Since 2020, MicroStrategy has started buying bitcoins on a large scale. The coins were financed by share sales and bonds with a total value of around USD 16 billion. The Company has now accumulated more than 444,000 bitcoins – currently worth more than USD 45 billion. It was recently announced that MicroStrategy had filed an application with the SEC to increase the number of shares to up to 10.33 billion. The new capital is to be invested even more in the cryptocurrency. If the Bitcoin price continues to rise, this will pay off, but after the sharp rise in the Bitcoin price, a consolidation will come as no surprise.

Analysts also see it that way, warning of the dangers despite the growth story. The current valuation of the share is strongly driven by the high prices of Bitcoin, and the actual software business is increasingly fading into the background. If the crypto market were to experience increased downward volatility, this could jeopardise the Company's financial stability. In addition, quantum computing could develop into a threat to the crypto market. Those who still want to invest in Bitcoin should instead invest directly in the cryptocurrency. Most recently, the share price corrected significantly and is currently trading at around USD 316, which means that the Company's market capitalization is still USD 30 billion higher than the value of Bitcoin.

Palantir has significantly expanded its data analysis business and its focus on artificial intelligence, but its high market valuation and strong competition should be viewed skeptically. Desert Gold offers opportunities with a project in Mali and significant growth prospects and could come to the attention of large gold producers. MicroStrategy has made massive Bitcoin investments, making it dependent on the crypto market. The market capitalization currently appears too high. The biggest potential for significant gains comes from adding Desert Gold to the portfolio.