Palantir Technologies (NASDAQ:PLTR), the data analytics and AI software powerhouse, has been generating buzz recently. With its AI protocol business growing at nearly 40% over the past year, supporters argue that Palantir is ready to earn its due respect on Wall Street.
Kyle Wool, CEO of Dominari Financial, believes Palantir’s growth trajectory is gaining momentum. In a recent Fox Business appearance, Wool expressed optimism, suggesting that Palantir might finally break out.
Given the substantial investments Big Tech is making in AI, Palantir seems well-positioned to benefit. However, the key question remains: Will Palantir’s stock take off as the company turns AI into cash, or will it continue to face growth hurdles?
Palantir’s Stock Rally
Palantir’s stock performance has been impressive, with shares rising 58.8% over the past year, outpacing the S&P 500 Index’s 25% gain. In 2024, Palantir has already seen a 38.9% increase. Despite a major bull gap in February, the stock has since consolidated in a range between $20.50 and $25.50.
With a market cap of around $51.5 billion and an enterprise value of $50.6 billion, Palantir is priced at a premium. The forward price/earnings ratio stands at 149.81, with a price/sales multiple of 19.09 and a price-to-earnings-growth (PEG) ratio of 5.49. These high multiples indicate strong investor confidence in Palantir’s future growth, but they also require consistent performance to justify the valuation.
PLTR Beats on Earnings, Misses on Guidance
In Q1, Palantir reported $634 million in revenue, surpassing the estimated $625 million and marking a 21% year-over-year increase. Earnings per share (EPS) were $0.08, and net income was $105.5 million. This performance was driven by strong demand for Palantir’s AI platform from both government and commercial customers, with U.S. commercial revenue jumping 70% year-over-year in Q4 2023.
However, the stock fell after a miss on Q1 billings and revenue guidance that disappointed investors. Management expects Q2 revenue of $649 million to $653 million, below Wall Street’s $653 million consensus. Full-year revenue is forecasted at $2.68 billion to $2.69 billion, while analysts anticipated $2.71 billion.
Palantir’s Strategic Roadmap
Palantir has secured several high-profile contracts and partnerships, reinforcing its position in AI and data analytics. Notable deals include a $178 million contract with the U.S. Army for the Titan system, which uses AI and machine learning to manage sensor data, and a $480 million deal for the Maven Smart System, an AI program for target detection.
The company is also collaborating with Oracle (NYSE:ORCL) to migrate Palantir’s Foundry workloads to Oracle Cloud Infrastructure and deploy its AI Platforms via Oracle’s cloud environments. This partnership aims to deliver secure, scalable solutions meeting high security and sovereignty standards.
Palantir’s Path Ahead
Analyst ratings for Palantir are mixed, with a mean target price of $20.93, indicating a potential 12.2% downside from the current price. Out of 14 analysts, 2 recommend a “Strong Buy,” 1 a “Moderate Buy,” 6 a “Hold,” 1 a “Moderate Sell,” and 4 a “Strong Sell.”
The Bottom Line on PLTR Stock
Palantir is an AI stock to watch, thanks to its impressive growth and strategic moves. However, consistent growth and meeting investor expectations are crucial to justify its high valuation. The upcoming earnings report will be critical in determining whether the company can maintain its momentum. With opinions divided, Palantir remains a growth stock worth keeping on your watchlist.
Featured Image: Megapixl