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Palantir Stock Rises After Earnings: Dark Horse of AI Applications?
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The AI revolution has been the leading theme of the market this year, but the last couple of weeks have spurred doubts about the applications and profit potential of the technology. While tech giants like Microsoft ((MSFT - Free Report) ) and Alphabet ((GOOGL - Free Report) ) had to reassure investors that their recent capex will eventually reap profits, Palantir ((PLTR - Free Report) ) has cleared up any doubts about its monetization of the technology.
At its quarterly earnings report on Monday afternoon, Palantir posted a strong period, beating both top and bottom-line estimates. Customer count grew 41% year-on-year revenue grew 27% and adjusted earnings per share (EPS) grew 80% year-on-year.
Management noted the impressive growth rates across its business segments and highlighted the especially promising AI platform, which grew revenue 55% year-on-year. Outspoken CEO Alex Karp believes that his company is in a league of its own when it comes to real life use of AI technology.
AI Platform at Palantir
Palantir has been a trailblazer in the technology sector and was an early pioneer in the AI space. As a data analytics and enterprise software company, it has been ahead of its competitors, focusing on collecting, organizing and analyzing disparate data sets for its clients and providing actionable insights.
Originally focused on government and intelligence agencies, Palantir has expanded its customer base to include commercial enterprises in sectors like finance, healthcare, and manufacturing. The company's technology is often used for tasks like fraud detection, supply chain optimization, and operational efficiency.
Today, things are moving fast. Palantir's business has evolved significantly with the launch of its flagship AI platform, AIP, just over a year ago. This platform has driven transformative growth across both commercial and government markets. In Q2 2024, Palantir generated $159 million in revenue in the U.S. commercial market alone, marking a 55% increase from the previous year. When excluding strategic commercial contracts, the growth rate soared to 70% year-over-year. This robust demand for effective enterprise AI solutions highlights the platform's impact.
Palantir’s AI capabilities have been critical in surpassing traditional enterprise software's limitations, providing real value through sophisticated data integration and analysis. Unlike many past enterprise solutions that focused on data shuffling without substantial outcomes, Palantir’s AIP addresses real-world challenges with AI-driven insights.
The company has seen remarkable growth in its customer base, with nearly 300 commercial customers in the U.S. alone, up from just 14 four years ago. This expansion reflects a broader trend of institutions adapting quickly to leverage AI, particularly in the U.S., where Palantir's revenue from government contracts has also exceeded $1 billion over the past twelve months.
Palantir presents hard evidence showing effectiveness of its AI platform, which is more than Alphabet and Microsoft can say. While I have no doubt that both Alphabet and Microsoft will find useful integrations for AI, Palantir is doing it today.
Palantir Stock Shows Strong Momentum
The price action in Palantir stock has been quite bullish since the start of year, with the stock moving in rapid spurts. It is outperforming the broad market and many leading stocks, demonstrating its powerful momentum and relative strength.
Also notable is how well the share price has held up during the most recent bout of volatility. Many stocks have been hit hard over the past few weeks, while Palantir is approaching its year-to-date high. PLTR stock currently sits about 40% below its all-time high price from back in 2021.
Image Source: Zacks Investment Research
High Growth Forecasts at Palantir
As noted in the earnings report, Palantir is growing fast. Sales over the next two years are projected to increase over 20% annually and EPS are forecast to grow 26.8% annually over the next three to five years.
Palantir has a Zacks Rank #3 (Hold) rating, indicating a flat earnings revision trend.
Image Source: Zacks Investment Research
Palantir Shares Trade at a Premium Valuation
While Palantir enjoys strong growth rates and huge potential in the AI and enterprise software space, investors must pay up to get the exposure. PLTR is currently trading at an exceptionally high relative valuation.
At nearly 20x forward sales and 68x forward earnings, Palantir is among the richest stocks of its size. For investors this begs the question of whether they are willing to pay the premium for AI potential.
Image Source: Zacks Investment Research
Should Investors Buy Palantir Stock?
Palantir has a lot going for it and is arguably one of the leaders of the AI revolution. Its ability to actually monetize AI technology puts it above other leading tech firms.
However, the stock is incredibly expensive. For investors who seek value, and low risk, Palantir may not be the stock for you. But for investors looking for strong momentum, potentially world altering technology and more volatility, Palantir may fit into their portfolio.
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Palantir Stock Rises After Earnings: Dark Horse of AI Applications?
The AI revolution has been the leading theme of the market this year, but the last couple of weeks have spurred doubts about the applications and profit potential of the technology. While tech giants like Microsoft ((MSFT - Free Report) ) and Alphabet ((GOOGL - Free Report) ) had to reassure investors that their recent capex will eventually reap profits, Palantir ((PLTR - Free Report) ) has cleared up any doubts about its monetization of the technology.
At its quarterly earnings report on Monday afternoon, Palantir posted a strong period, beating both top and bottom-line estimates. Customer count grew 41% year-on-year revenue grew 27% and adjusted earnings per share (EPS) grew 80% year-on-year.
Management noted the impressive growth rates across its business segments and highlighted the especially promising AI platform, which grew revenue 55% year-on-year. Outspoken CEO Alex Karp believes that his company is in a league of its own when it comes to real life use of AI technology.
AI Platform at Palantir
Palantir has been a trailblazer in the technology sector and was an early pioneer in the AI space. As a data analytics and enterprise software company, it has been ahead of its competitors, focusing on collecting, organizing and analyzing disparate data sets for its clients and providing actionable insights.
Originally focused on government and intelligence agencies, Palantir has expanded its customer base to include commercial enterprises in sectors like finance, healthcare, and manufacturing. The company's technology is often used for tasks like fraud detection, supply chain optimization, and operational efficiency.
Today, things are moving fast. Palantir's business has evolved significantly with the launch of its flagship AI platform, AIP, just over a year ago. This platform has driven transformative growth across both commercial and government markets. In Q2 2024, Palantir generated $159 million in revenue in the U.S. commercial market alone, marking a 55% increase from the previous year. When excluding strategic commercial contracts, the growth rate soared to 70% year-over-year. This robust demand for effective enterprise AI solutions highlights the platform's impact.
Palantir’s AI capabilities have been critical in surpassing traditional enterprise software's limitations, providing real value through sophisticated data integration and analysis. Unlike many past enterprise solutions that focused on data shuffling without substantial outcomes, Palantir’s AIP addresses real-world challenges with AI-driven insights.
The company has seen remarkable growth in its customer base, with nearly 300 commercial customers in the U.S. alone, up from just 14 four years ago. This expansion reflects a broader trend of institutions adapting quickly to leverage AI, particularly in the U.S., where Palantir's revenue from government contracts has also exceeded $1 billion over the past twelve months.
Palantir presents hard evidence showing effectiveness of its AI platform, which is more than Alphabet and Microsoft can say. While I have no doubt that both Alphabet and Microsoft will find useful integrations for AI, Palantir is doing it today.
Palantir Stock Shows Strong Momentum
The price action in Palantir stock has been quite bullish since the start of year, with the stock moving in rapid spurts. It is outperforming the broad market and many leading stocks, demonstrating its powerful momentum and relative strength.
Also notable is how well the share price has held up during the most recent bout of volatility. Many stocks have been hit hard over the past few weeks, while Palantir is approaching its year-to-date high. PLTR stock currently sits about 40% below its all-time high price from back in 2021.
Image Source: Zacks Investment Research
High Growth Forecasts at Palantir
As noted in the earnings report, Palantir is growing fast. Sales over the next two years are projected to increase over 20% annually and EPS are forecast to grow 26.8% annually over the next three to five years.
Palantir has a Zacks Rank #3 (Hold) rating, indicating a flat earnings revision trend.
Image Source: Zacks Investment Research
Palantir Shares Trade at a Premium Valuation
While Palantir enjoys strong growth rates and huge potential in the AI and enterprise software space, investors must pay up to get the exposure. PLTR is currently trading at an exceptionally high relative valuation.
At nearly 20x forward sales and 68x forward earnings, Palantir is among the richest stocks of its size. For investors this begs the question of whether they are willing to pay the premium for AI potential.
Image Source: Zacks Investment Research
Should Investors Buy Palantir Stock?
Palantir has a lot going for it and is arguably one of the leaders of the AI revolution. Its ability to actually monetize AI technology puts it above other leading tech firms.
However, the stock is incredibly expensive. For investors who seek value, and low risk, Palantir may not be the stock for you. But for investors looking for strong momentum, potentially world altering technology and more volatility, Palantir may fit into their portfolio.