Jim Cramer has clear favorite software stock right now and its not Palantir — despite its meteoric rise over the past year and all the attendant Wall Street excitement. Instead, he prefers Salesforce thanks to its rock-solid fundamentals and clear growth trajectory. Palantir has quickly staked its claim as “the most highly valued enterprise software data analytics company,” Jim Cramer said Monday on Squawk on the Street. “I would love to put it [Palantir stock] in my Charitable Trust, but it doesn’t fit any parameter other than the fact that I think it’s going up. That’s a good hedge fund reason to own but not a good portfolio reason to own,” Jim explained. Run by charismatic CEO Alex Karp, Palantir serves both government and commercial sectors like healthcare, finance and energy. Palantir saw explosive growth in 2024 with its U.S. commercial business jumping 50% compared to its 36% gain in 2023. Its government business also saw a boost, growing 27%, compared to 11% the previous year. Investors responded, pushing the stock up more than 340% in 2024. PLTR 1Y mountain PLTR 1-year stock performance. Palantir’s technical capabilities in software data integration have allowed it to become one of the “early winners in the stage of the AI era,” Morgan Stanley wrote in a note to clients Monday. The bank assumed coverage on the stock with an underweight rating, given the stock’s surge last year, with a price target of $60, reflecting a 25% upside. Despite all the investor excitement, Jim isn’t ready to buy Palantir. “We don’t know how to value it,” he cautioned, pointing out that Palantir’s complex business model makes it difficult to predict future earnings and growth accurately. In Jim’s Sunday column , he discussed at length why buying Palantir and fellow high-flyer Tesla isn’t so simple. Salesforce, on the other hand, fits into Jim’s investment philosophy and is a holding in Jim Cramer’s Charitable Trust, the portfolio we use for the Club. He particularly likes that Salesforce’s AI-powered Agentforce chatbots are gaining traction across several industries.
Why Jim Cramer likes enterprise software stock Salesforce over Palantir