What’s the hottest S&P 500 stock of 2024? Palantir Technologies (NASDAQ: PLTR) is the hands-down winner. Shares of the artificial intelligence (AI) and data analytics software provider have skyrocketed more than 320% year to date.
Thanks to this impressive performance, Palantir’s market cap now hovers around $165 billion. But I suspect Palantir’s momentum could soon wane. Here are two stocks I predict will be worth more than Palantir five years from now.
Intuitive Surgical (NASDAQ: ISRG) might seem to be a pick that’s too easy to make. The robotic surgical-systems maker already sports a market cap of around $194 billion, well above Palantir’s market cap. But I think Intuitive Surgical isn’t just bigger than Palantir now; I predict it will be bigger in the future, too.
This stock has been on quite a roll in 2024, although its performance hasn’t been in the same league as Palantir’s. Intuitive’s da Vinci surgical system installed base increased 15% year over year in the third quarter of 2024. Its procedure volume jumped 18%. More installed systems plus more procedures add up to strong revenue and earnings growth for the company.
Intuitive Surgical should continue to enjoy growth for years to come thanks to an important demographic tailwind. Populations are aging in the U.S. and in many other countries around the world. As people age, they’re more likely to require surgery. This should translate to accelerated procedure volume growth for da Vinci.
Around 2.2 million procedures were performed with da Vinci in 2023. Intuitive Surgical estimates roughly 7 million procedures are performed each year where it already has products and clearances. However, three times that number of soft tissue surgeries are performed annually. This presents a huge opportunity for the company.
The biggest knock against Intuitive Surgical is its valuation. Shares of the robotic surgical-systems leader trade at around 69 times forward earnings. Compared to Palantir’s forward earnings multiple of 161, though, Intuitive Surgical looks cheap.
You might think I’m crazy, but I also predict that Pfizer (NYSE: PFE) will be worth more than Palantir five years from now. The drugmaker’s current market cap of $145 billion is well below Palantir’s. Pfizer stock is down this year when many stocks have soared. So what’s my logic behind this contrarian call?
My view is that Pfizer is one of the most underrated stocks around, while Palantir is arguably overrated. Its shares trade at only 8.6 times forward earnings. That’s half the size of the average S&P 500 healthcare stock’s forward earnings multiple. Pfizer’s price-to-earnings-to-growth (PEG) ratio based on five-year earnings growth projections is a super-low 0.18, according to financial-markets infrastructure and data provider LSEG.
