Could Asana Be the Next Palantir?

One of the more common ideas surrounding the impacts of artificial intelligence (AI) pertains to productivity in the workplace. JPMorgan Chase CEO Jamie Dimon recently theorized that AI will bring such mass efficiencies to the workplace that employees will only work three and a half days per week as the technology scales.

One of the biggest drivers of enhanced productivity in a corporate environment comes from how AI will be integrated into software platforms. Many investors are familiar with Palantir Technologies -- an enterprise software company specializing in data-driven analytics. Thanks to its progress on the AI front, Palantir has emerged as a leader in the software realm, and the market has been cheering the company for some time now.

Recently, I stumbled across another rising star in the AI software arena called Asana (NYSE: ASAN). Although Asana's share price has performed essentially on par with the S&P 500 and Nasdaq Composite this year, recent movements suggest the stock could be about to take off.

What does Asana do?

Asana offers workplace productivity software -- tools that can help you manage and streamline workflows. These platforms make tasks such as assigning project roles, scheduling meetings, and tracking progress across teams easier.

Now, as generative AI becomes increasingly integrated with software tools, the idea is that productivity platforms will feature even more robust capabilities, thereby yielding higher levels of efficiency in the workplace.

According to Grand View Research, the total addressable market (TAM) for AI productivity tools is expected to grow at a compound annual growth rate of 27% between 2024 and 2030 -- ultimately reaching a size of $36.4 billion by the end of this decade.

Image source: Getty Images.

Could Asana be the next Palantir?

In the chart below, you can see that Asana stock experienced a pretty dramatic pop on Dec. 6. Driving this upward movement was a better-than-expected fiscal 2025 Q3 earnings report where management boasted about the company's successful foray into new AI-powered tools.

Data by YCharts.

And I can't help but draw a comparison between this rally for Asana and the one that began for Palantir last spring. The company launched its Artificial Intelligence Platform (AIP) in April 2023, and its stock surged the following month when it reported Q1 results. Since then, management has demonstrated how AIP is accelerating sales, widening margins, and driving consistent profitability. This dynamic has fueled a frenzy of bullish buying for the stock. In fact, Palantir is 2024's top-performing S&P 500 constituent as of this writing -- surging over 315% year to date.

Data by YCharts.

While it may look like Asana is on a similar trajectory following its initial dive into AI, I'd caution investors against buying into such a narrative.

Although enterprise software and data analytics are crowded markets, Palantir has proven that it can compete with its larger peers, so much so that many megacap tech giants are choosing to partner with Palantir as opposed to competing with the company directly. To me, Palantir appears very much on its way to building a competitive moat as it continues to scale.

With all due respect to Asana, I just can't say the same about its business. The workplace productivity market is jam-packed with competing platforms -- from customer relationship management (CRM) to enterprise resource planning (ERP), budgeting and forecasting, sales operations, and so much more. Even though Asana's outlook appears optimistic, it's far too early to say the company is the next Palantir at this time.

For now, Asana is a company worth monitoring, and investors should consider an investment in the company at a more reasonable valuation once the current momentum has cooled off.

Should you invest $1,000 in Asana right now?

Before you buy stock in Asana, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Asana wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $827,780!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of December 9, 2024

JPMorgan Chase is an advertising partner of Motley Fool Money. Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends JPMorgan Chase and Palantir Technologies. The Motley Fool recommends Asana. The Motley Fool has a disclosure policy.