Big data company Palantir Technologies (NYSE:PLTR) has certainly been among the top AI stocks investors have bought into during this recent cycle. Impressively, PLTR stock has surged 65% surge so far in 2024. With the help of its new AI platform and strong focus on U.S. government collaborations, Palantir has strong growth potential, leading many investors to jump into this stock. Moreover, its customer base has also grown 79% since 2022, adding 220 more new revenue streams. Favorable tax conditions and rising relevance boost its investment appeal.

Following an impressive second quarter (Q2) earnings report, PLTR stock rose, nearly reaching its 2021 heights. The company is also growing more prospects due to continued appreciation, making it a risky bet for short sellers. Although these risks are present, the outlook remains optimistic for Palantir, making it a buy.

Impressive Q2 2024 Earnings

As mentioned, shares of PLTR stock soared after Palantir announced Q2 quarterly expectations, prompting the company to raise its forecast. Revenue reached $678.13 million, net income came in at $134 million, and the company brought in 6 cents of earnings per share. All these metrics came above where many analysts had pegged the report initially.

Palantir’s CEO Alex Karp highlighted strong demand for its software and services segment as driving these results. Notably, commercial revenue reached $307 million. U.S. sales also surged 55%, resulting in $159 million. Palantir reported $634 million in Q1 2024 revenue, up 21% year-over-year. The AI platform and strong U.S. commercial growth drove this increase. Adding 41 U.S. commercial clients and recording $81 million in GAAP operating income, Palantir looks poised for continued growth moving forward. Despite European hurdles, Palantir is optimistic about global AI demand. 

In 2023, all indexes saw a significant rebound due to AI interest. The trend continued in 2024, with the Nasdaq up 18% and the S&P 500 saw a 15% surge. Palantir was one of the most outstanding performers, surging 66%. Analyst Dan Ives of Wedbush Securities predicts further gains, setting a $50 price target, indicating a potential 75% upside.

Analysts rate PLTR a Buy with a $29 target, indicating strong future profitability and cash flow.

Annual Revenue and Profit Targets Raised

On Monday, Palantir was proud to announce it has raised its annual revenue and profit forecast again due to strong demand by AI. Shares surged 12% in extended trading, which contributed to the 39% year-to-date gain. Moreover, it also reported the highest quarterly profit since, projecting Q3 sales above forecasts.

Palantir’s AI platform, essential for developing GenAI tech, drove a revenue forecast increase to $2.74-$2.75 billion, surpassing earlier estimates. Adjusted income projections rose to $966-$974 million. Despite a recent 9% share dip following mixed Big Tech earnings, the updated forecasts eased investor concerns.

Palantir’s Chief Revenue Officer Ryan Taylor noted the company’s role in bridging gaps between AI prototypes and customer-ready products. The commercial sector in the U.S. saw an increase of 55%, and the forecast for Q3 revenue exceeded estimates. Palantir reports adjusted earnings of $0.09 cents, beating the $0.08-cent estimate.

Founded in 2003, Palantir has been used in a lot of U.S. military segments, skyrocketing past $1 billion in annual government revenue. The company’s commercial sales rose 33% to $307 million, matching analyst expectations. Government sales also exceeded forecasts, reaching $371 million for the June quarter, up 23%.

Strong Growth Story

Palantir’s growth story, highlighted since September 2020, has been driven by its expanding commercial sector. Heading into 2024, the company showed significant acceleration due to strong U.S. commercial growth and its AI Platform (AIP), which utilizes advanced AI and ML tools. Q1 results revealed continued momentum for AIP and U.S. commercial revenue, with government revenue rebounding to 16% year-over-year growth.

Since its launch, Palantir’s AIP has seen high demand. The company offers a free trial with user and ontology limits. Management reported strong interest and noted over 915 organizations have joined AIP boot camps, up from 560 in February. They also observed quicker deal cycles, including a seven-figure deal signed within days of a boot camp. Quarterly deals have accelerated, though many are on the smaller end, between $1 million and $5 million.

PLTR Stock Still Looks Like a Buy

Despite minimal share price movement since the company’s recent strong Q2 earnings report reinforces investor confidence. This growth is fueled by rising demand for generative AI solutions, with businesses keen on integrating large language models. Microsoft’s CEO, Satya Nadella, noted this trend, highlighting Palantir’s increased usage alongside major firms.

The generative AI market’s expected double-digit growth suggests Palantir’s expansion is just beginning. Recent contracts and increased military investments, including AI projects and the development of the army’s first AI-defined vehicle, highlight the U.S. government’s commitment to AI and its ongoing partnership with Palantir.

On the date of publication, Chris MacDonald 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.

On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.