shares Palantir Technologies(NASDAQ:PLTR) It has more than quadrupled year-to-date due to continued demand for the company’s new AI platform. However, the average price target for the stock indicates a decline of 48%. In this context, Shopify(NYSE: STORE) and Holding arm(NASDAQ:ARM) Offering more compelling investment options.
Palantir is currently valued at $165 billion, but I think Shopify and Arm could surpass that number before the end of 2025. Some Wall Street analysts agree, as detailed below:
Loop Capital analyst Anthony Chukumba recently raised his price target on Shopify to $140 per share, implying a 23% upside from the current share price of $114. This would give the company a market value of $180 billion.
Morgan Stanley Analyst Lee Simpson has a price target on Arm of $175 per share, which implies a 28% upside from the current stock price of $137. This would give the company a market value of $183 billion.
Here’s what investors should know about Shopify and Arm.
Shopify integrates physical and digital sales channels into a single dashboard that allows merchants to manage their business across multiple storefronts. Shopify also provides a wide range of financial services and commerce-adjacent solutions, including tools for business-to-business (B2B) commerce, also known as wholesale commerce.
Investors may not think of Shopify as a artificial intelligence Company (EI). But automation represents a huge opportunity to better serve merchants and improve efficiency, and Shopify is turning to it. The company has introduced a set of AI tools called Shopify Magic that helps merchants organize storefronts, create marketing content, write product descriptions, and provide customer service. .
Additionally, Shopify uses AI internally to help its engineering, sales, and finance teams. This will boost margins and lead to increased profitability over time. In fact, the potential for AI-based margin expansion is one of the reasons Loop Capital’s Anthony Chukumba recently raised his price target.
Shopify reported encouraging third-quarter financial results that beat estimates. Revenue rose 26% to $2.1 billion thanks to strong growth in sales across subscription software and commerce services. Meanwhile, Non-GAAP Earnings rose 46% to $0.35 per diluted share. The company expects similar sales growth in the fourth quarter.
Additionally, management highlighted strong increases in gross merchandise volume in three strategic growth areas: offline (27%), wholesale (145%), and international (30%). Shopify also said the number of international merchants (i.e. outside North America) on its platform increased by 36% in the third quarter.
Wall Street expects Shopify’s earnings to grow 44% annually over the next three years. This makes the current valuation of 107 times earnings seem acceptable. As a caveat, while I think the stock could return 23% before year-end 2025, putting Shopify ahead of Palantir’s current market cap, shares aren’t cheap. Therefore, investors should start with a very small position.
Arm develops central processing unit (CPU) architectures and related products such as software development and systems design solutions. It licenses intellectual property to companies that want to build their own chips. These companies benefit from outsourcing some chip-related R&D costs, while retaining the ability to customize chip design. Competitors like Intel and AMD Doesn’t offer the same flexibility.
The CPU architecture determines how hardware interacts with software. ARM CPUs are known for their energy efficiency, which has made them the industry standard in battery-powered mobile devices. For example, Arm has more than 99% of the smartphone market share. But the company has made strides in improving performance with its latest architectures, sharing the gains in the data center.
actually, NvidiaGrace Blackwell’s chips pair GPUs with Arm CPUs to accelerate data center workloads like artificial intelligence. And the three major public clouds — Amazon web services, Microsoft Azure, and alphabetGoogle Cloud – They deployed Arm CPUs in their data centers. Sales growth from cloud computing customers reached a record high in the June quarter, CFO Jason Child said.
Most recently, Arm reported September quarter results that beat guidance, but the numbers themselves weren’t that impressive. Total sales increased 5% to $844 million due to strong growth in royalty revenue per segment, offset by lower licensing revenue that management attributed to normal timing fluctuations. Meanwhile, non-GAAP earnings fell 17% to $0.30 per diluted share.
However, management expects growth to rebound in the coming quarters, with full-year revenue and adjusted earnings increasing 22% in fiscal 2025, which ends in March. Beyond that, Wall Street expects earnings to grow 33% annually through fiscal 2027. In this context, the current valuation of 100 times adjusted earnings is still expensive, but investors will have to pay a premium to own the stock for now due to excitement around the AI boom. .
Importantly, although I believe Arm shares could return 28% next year, exceeding Palantir’s current market cap, investors who are uncomfortable with volatility should avoid the stock. Even those who are comfortable with volatility should start with a very small position.
Have you ever felt like you’ve missed out on your most successful stock buying journey? Then you’ll want to hear this.
On rare occasions, our team of expert analysts issues a “Double Bottom” stock. Recommendation of companies they think are about to emerge. If you’re worried about missing your opportunity to actually invest, now is the best time to buy before it’s too late. The numbers speak for themselves:
Nvidia:If you invested $1,000 when we doubled your money in 2009,You will have $350,239!*
apple: If you invested $1,000 when we doubled your money in 2008, You will have $46,923!*
Netflix: If you invested $1,000 when we doubled your money in 2004, You will have $492,562!*
We are currently issuing “double” alerts for three amazing companies, and there may not be another opportunity like this anytime soon.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Susan Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Trevor Genuine He has positions at Amazon, Nvidia, Palantir Technologies, and Shopify. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Intel, Microsoft, Nvidia, Palantir Technologies, and Shopify. The Motley Fool recommends the following options: long $395 January 2026 calls on Microsoft, short $27 February 2025 calls on Intel, and short $405 January 2026 calls on Microsoft. The Motley Fool has Disclosure policy.
