While big data analytics specialist Palantir Technologies (NYSE:PLTR) offered no real news on Thursday, PLTR stock managed to gain double-digit percentage points. Shares continue to ride the enthusiasm of the tech firm’s strong first-quarter earnings report. As well, Cathie Wood’s flagship fund ARK Innovation ETF (NYSEARCA:ARKK) recently added to its position in PLTR.
Last Monday, Palantir reported its results for the quarter ended March 31, posting robust results and an encouraging outlook. Some highlights include GAAP net income of $17 million, representing its second consecutive quarter of positive GAAP net income. Further, adjusted earnings per share came out to 5 cents.
Additionally, total revenue expanded 18% on a year-over-year basis to $525 million. In particular, government revenue jumped 20% YOY to $289 million. Within this subsegment, U.S. government sales increased 22% YOY to $230 million.
One day following the earnings disclosure, PLTR stock jumped 22%. A major catalyst centered on management stating that it expected to turn a profit every quarter this fiscal year, according to Reuters. Undergirding enthusiasm for Palantir’s services is the massive interest in its new artificial intelligence (AI) platform.
PLTR Stock Gets Additional Endorsements, But Questions Remain
Bolstering enthusiasm for PLTR stock, investor and entrepreneur Cathie Wood saw significant upside for the underlying tech firm. Her flagship ARK Innovation ETF bought over 3.75 million shares of PLTR last Wednesday, noted a Seeking Alpha article, citing the company’s daily trades e-mail.
Also on the same day, the ARK Next Generation Internet ETF (NYSEARCA:ARKW) also bought over 600,000 shares. According to Acumen Research and Consulting, the global big data market size reached $163.5 billion in 2021. By 2030, analysts there project that the sector valuation will hit $473.6 billion. Therefore, the enthusiasm for PLTR stock seems well justified.
As well, some Wall Street analysts are impressed with Palantir’s new generative AI platform, potentially setting a fresh benchmark for the underlying innovation. Notably, Palantir’s platform leverages the same technology behind ChatGPT, the creation of OpenAI.
Understandably, generative AI presents incredible productivity advancements, especially in the fields of efficiency and automation. At the same time, the innovation isn’t without its flaws.
Per CorporateIntel, quality issues may arise from generative AI, leading to low quality or even nonsensical results. As well, the inputted data streams used to train AI protocols may reflect the human engineers’ biases. Of course, this matter presents social discrimination concerns. Additionally, such biases can impact the accuracy and therefore the value of AI-driven material.
Why It Matters
Although retail investors appear enthused about PLTR stock, analysts overall have a different take. Per TipRanks, the consensus view for Palantir is a hold. The experts’ average price target sits at $8.88, which now represents roughly 25% downside risk.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.