Investing in the right company at the wrong price is always a bad idea. However, that’s what happened over the past few years when many investors chased some of the market’s hottest high-growth stocks without considering their skyrocketing valuations.
So with the S&P 500 still trading at a historically high P/E ratio of nearly 30x, it might be wiser to wait for the next market crash before embracing these market darlings. When the pullback eventually happens, I will buy Ion Q (NYSE: IONQ) and Palantir (NASDAQ: PLTR) –Both companies are firing on all cylinders, but at extremely high valuations.
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IonQ is a pioneer in quantum computing, capable of processing certain tasks much faster than a classical computer. Unlike older electronically driven systems that require cryogenic refrigeration, IonQ’s “trapped ion” system can operate at room temperature. This makes them smaller, more scalable and more accurate for complex calculations than electronics-based systems.
From 2025 to 2028, analysts expect IonQ’s revenue to grow at a compound annual growth rate of 64% as it sells more systems (Aria, Forte, Forte Enterprise and Tempo) while expanding its cloud-based quantum computing platform. Much of this growth will also be driven by large government contracts.
IonQ’s future looks bright, but its stock is already valued at 25 times 2028 sales. If the market crashed and significantly reduced the price-to-sales ratio, I would eagerly buy its shares.
Palantir is a data mining and analytics company that provides services to most U.S. government agencies. It aggregates data from different sources to help these agencies make informed decisions and is widely used in planning military and law enforcement missions. It also provides business services to large companies looking to streamline operations.
Analysts expect Palantir’s revenue and earnings per share to grow at a compound annual growth rate of 49% and 53%, respectively, from 2025 to 2028. Recent conflicts at home and abroad should prompt the U.S. government to increase spending on services. In contrast, leveraging AI-driven services to optimize operations should provide a strong boost to its commercial business. It also launched more tools for companies to develop their own custom AI applications.
