Cramer Dubs Palantir “Number One Meme Stock” Despite Defense Sector Potential

CNBC’s Jim Cramer has labeled Palantir Technologies (PLTR) the “number one meme stock of all time” while simultaneously recommending the data analytics company as tensions with China escalate. During a recent broadcast, Cramer expressed optimism about the defense sector broadly and singled out Palantir as a standout despite its unconventional market behavior, citing CEO Alex Karp’s ability to generate enthusiasm among retail investors.

The veteran market commentator’s complex assessment of Palantir highlights the unique position the company occupies at the intersection of government contracts, artificial intelligence capabilities, and unusual trading patterns driven by retail investor enthusiasm rather than traditional institutional valuation metrics.

Defense Sector Renaissance Amid Geopolitical Tensions

Cramer’s recent comments point to a potential renaissance for defense-related stocks as U.S.-China relations deteriorate. According to Insider Monkey, Cramer observed, “Defense is working again. I don’t know. It shouldn’t be given the pullback from Ukraine, right? But I sense maybe we’re embarking on a real buildup as tensions heat up with China.”

This geopolitical context provides a fundamental business case for Palantir, whose data analytics platforms are widely used by U.S. government agencies and military operations. The company’s Gotham platform, specifically designed for defense and intelligence applications, could see increased adoption as national security concerns intensify.

Palantir’s positioning within the defense-tech ecosystem offers potential insulation from broader market volatility, particularly as the U.S. government prioritizes technological advantages in areas of strategic competition with China. However, Cramer’s endorsement comes with significant caveats regarding the company’s market behavior.

The “Meme Stock” Phenomenon Continues

Despite his bullish outlook on Palantir’s sector positioning, Cramer has been remarkably candid about the stock’s unconventional trading patterns. According to Yahoo Finance, Cramer recently described the stock’s daily trading activity: “The meme guys are pushing it up every day. They push it up in the morning. They usually start around 3:30.”

This characterization points to coordinated retail trading rather than institutional investment decisions driving Palantir’s valuation. Such patterns raise questions about price sustainability and vulnerability to sentiment shifts unrelated to business fundamentals.

Further underscoring this view, Wall Street Pit reported Cramer describing Palantir as the “ultimate meme stock,” noting that retail investor enthusiasm keeps the stock’s price elevated even during volatile market conditions. He compared CEO Alex Karp’s influence to mythological figures rather than conventional corporate leadership, highlighting the unique role charismatic leadership plays in maintaining investor enthusiasm.

Investment Case Versus Valuation Concerns

While Cramer has advocated owning Palantir shares, his commentary acknowledges the significant valuation premium the company commands. Baron Asset Fund, cited in recent coverage, noted that at the end of 2024, Palantir was trading at approximately 200 times its expected 2024 earnings, with a market capitalization exceeding $100 billion.

This extreme valuation stands in stark contrast to traditional metrics that would typically guide institutional investment decisions. The fund noted that Palantir and another high-flying tech stock accounted for 52% of their benchmark’s gain during one quarter, demonstrating the outsized impact of these momentum-driven investments.

Despite these concerns, Cramer has cautioned against betting against Palantir. During a recent program, he advised investors, “Don’t get in front of that swing on the short side,” acknowledging the powerful momentum that can override traditional valuation concerns in the current market environment.

Strategic Considerations for Investors

For investors considering Palantir based on Cramer’s commentary, several strategic considerations emerge. The company benefits from secular trends in data analytics, artificial intelligence applications, and increasing defense spending—all potentially supportive of long-term growth. Palantir’s established relationships with government agencies provide revenue stability that many technology companies lack.

However, the stock’s classification as a “meme stock” by a prominent market commentator like Cramer suggests potential for significant volatility unrelated to business performance. The extreme valuation relative to current earnings leaves little margin of safety should growth expectations not materialize as anticipated.

Amidst these considerations, Cramer has maintained a pragmatic view. Recently, when asked about Palantir, he responded: “Well… Alright, so Palantir is a company that frankly is a meme stock, but it does have some good science to it, some good tech to it, and I’m going to tell you, you can buy it.” This balanced assessment acknowledges both the company’s technological merits and the unconventional market dynamics surrounding its stock.