Wedbush increased its price target on Palantir (NASDAQ:PLTR) after its December quarterly results were better than expected, and PLTR stock surged.
Palantir reported net income of $93.4 million, 8 cents per share fully diluted, on revenue of $608.3 million during the quarter. Revenue was up 20%, but income from operations rose 34%.
PLTR stock is expected to open this morning at a little over $20 per share, up 20% overnight.
Rising AI Tide
Dan Ives of Wedbush now expects Palantir to be worth $30 per share next year. His previous estimate was $25.
Palantir was already a leading government IT contractor, but its commercial business is now surging. Commercial revenue was $284 million during the quarter, up 32%, and demand from U.S. customers was up 70%.
Palantir has a proprietary database system that quickly turns large, fast-changing databases into actionable intelligence. Both Israel and Ukraine are reportedly using it as decision support in their wars.
Before earnings, bloggers and small investors were much more optimistic about Palantir than professional analysts. Citigroup was even telling investors to stay away.
Instead, shares that traded at $16.05 on Feb. 1 were at $17.56 as trading opened yesterday. Critics questioned the company’s growth rate, and indeed, the final quarter’s revenue was only $5 million ahead of estimates. Instead, small investors hungry for a successful artificial intelligence (AI) business model bought Palantir aggressively.
Critics also questioned Palantir’s valuation, which is now $40 billion on 2023 revenue of $2.1 billion. But bulls expect revenue to accelerate from here. They also anticipate more institutional support as Palantir’s full-year profit makes it eligible to join the S&P 500.
The best news for bulls is that bears are still out there on Palantir. Samuel Smith of Leonberg Capital called the post-earnings move in the stock “irrational exuberance,” saying the valuation is ahead of its performance.
PLTR Stock: What Happens Next?
PLTR is another example of amateurs being ahead of professionals in analyzing a stock. It’s now up to Palantir’s management to prove them right.
As of this writing, Dana Blankenhorn did not hold (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.
