Palantir Technologies’ (NASDAQ:PLTR) stock has certainly been on a roll in recent months.
Continuing to trade near its 52-week high, many are now considering the company’s valuation, and whether its stock price currently make sense, given how aggressive this recent move higher has been.
Of course, bulls note the company’s improved profitability, while bears continue to focus on the company’s revenue growth, which could decelerate.
Palantir’s AI platform gains traction with new contracts like the $178M Army deal. However, concerns persist over its valuation. Thus, this is a very divisive stock to dive into.
In 2024, PLTR surged 51%, following a 167% jump in 2023. Palantir is noted among some of the top AI stocks because of its potential. The company leverages AI and big data competencies for its clientele, which include a mix of government agencies and commercial clients.
It’s Palantir’s recent growth and expansion into commercial markets, expanding into health care, energy, and manufacturing companies, that’s enticing many investors to consider this stock.
Pricing for its AI products remains undisclosed, prompting analysts to seek revenue stream development clarity.
Palantir’s current market cap is $51.6 billion, ranking it the 350th largest American company. Let’s dive into why the picture looks increasingly bullish for this big data and AI company right now.
PLTR Stock Seeing Strong Momentum
Palantir Technologies stock surged 12.3% on Wednesday, maintaining an 11% increase by the afternoon and rising 2.4% on Thursday. The momentum is tied to the company’s AI business amid ongoing excitement about AI.
Palantir’s recent Army contract win and strong Q4 2023 results have further boosted investor confidence in its AI solutions, driving its stock up 187.6% in the past year.
Palantir’s $178 million contract with the U.S. Army for 10 Tactical Intelligent Target Access Node systems sparked investor interest. These TITAN ground stations will enhance data integration and soldier targeting capabilities, endorsed by Col. Chris Anderson for its transformative impact on battlefield intelligence.
Moreover, the company plans to refine TITAN prototypes over two years, with variants integrating space sensor data installed on tactical vehicles. Subcontractors like Anduril Industries will assist in hardware development and manufacturing for TITAN.
Analysts Are Optimistic
Wedbush Securities’ Dan Ives raised Palantir Technologies Inc.’s price target to $35 on March 8, citing strong AI prospects. He likened Palantir’s AI platform to soccer star Lionel Messi, hailing it as the “Messi of AI thesis.”
Ives views Palantir as an “undiscovered gem” in the AI revolution, anticipating a significant share of the $1 trillion AI market.
Amid a broader reassessment by analysts, Ives’ updated target reflects a more optimistic outlook for Palantir, with an average 12-month target of $20.22.
Jim Cramer’s endorsement on CNBC reinforces this sentiment, aligning with Ives’ bullish stance. Palantir’s $178 million contract extension with the U.S. Army also underscores its growing role in defense and AI development.
Scotia Capital Inc. increased its holdings in Palantir Technologies Inc. during Q3 by 55.0%, owning 26,117 shares worth $418,000.
Other investors also adjusted their stakes, including AlphaCrest Capital Management LLC, D.A. Davidson & CO., MetLife Investment Management LLC, and more. Hedge funds and institutional investors collectively hold 34.21% of PLTR stock.
Palantir and AI
The company develops software platforms to manage vast amounts of data efficiently, crucial for organizations facing data overload. For instance, the UK’s National Health Service handles millions of patient interactions daily, requiring real-time data analysis.
Palantir’s software reduced inpatient waiting lists by 28% and increased operating room utilization by 5.7% at London hospitals. With AI integration, Palantir aims for further customer expansion, anticipating evolving growth trends in the coming years.
If Palantir can show more use cases like this, and generate continued top- and bottom-line growth, this is a company with a fundamental picture that appears to support its higher valuation. While risky, PLTR stock still looks like a buy in my eyes.
On the date of publication, Chris MacDonald 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.
