Palantir Technologies Inc. (NYSE:PLTR) aids businesses and governments in analyzing large data sets, with key products including Palantir Gotham, Apollo, and Foundry. Its new Artificial Intelligence Platform propelled Palantir stock 65% higher in 2024, making it a favorite pick for investors and Wall Street analysts alike.
During its early months, Palantir was focused more in providing security software for the U.S. government. The company secured contracts for different government branches, like the FBI, CIA, and NYPD.
Palantir Gotham was also merged for structured and unstructured data for law enforcement and intelligence missions.
However, Palantir has seen impressive recent growth, with its customer base surging 79% over the past two years, adding more than 220 new revenue sources.
With favorable corporate taxes and limited regulation, PLTR stock could rise further. The company’s growth potential and increasing relevance through new contracts make PLTR an attractive investment.
Given its accessible price and the high demand for data processing in the expanding AI industry, PLTR is a top stock to consider buying now. Here’s the bull case behind why this top big data stock could be an AI-adjacent stock worth considering.
Palantir Stock and the AI Race
Palantir’s strong year-to-date performance is tied to its involvement in AI, a major trend due to the rise of generative AI models.
These models are making AI more accessible and comfortable for everyday users. Palantir’s AIP offers a more integrated solution, allowing large language model integration for effective use of generative AI.
Developers can leverage AIP to create custom applications, automate workflows, and build AI-powered business tools.
The company’s AIP marks a significant advancement in AI integration. Management noted “unprecedented” demand, despite limited adoption. Currently, U.S. commercial customers are the primary adopters, contributing about a quarter of overall revenue.
Palantir’s global commercial revenue is evenly split between domestic and international sales, while government contracts still constitute 53% of total revenue.
Management is confident that AIP will expand internationally and within government sectors, presenting a major unrealized growth opportunity.
Solid Financials
Palantir, a major data analytics firm, served diverse government and commercial clients. It aimed to expand its market share with advanced AI applications in military and commercial sectors in the US.
In Q1 2024, Palantir Technologies reported strong results with $634 million in revenue, a 21% increase year-over-year, driven by its AI platform and robust U.S. commercial sector.
The company added 41 U.S. commercial customers and achieved a record $81 million in GAAP operating income.
Despite European challenges, Palantir remained optimistic about global AIP demand. Revenue from the U.S. government increased 8% quarter-over-quarter.
Analysts give PLTR a Buy rating with a $29 price target. The market expects profitability and strong cash flow, showing a bright future for the company.
PLTR Still Looks Reasonably Valued
Palantir’s accelerated growth could continue, if uptake for the company’s suite of products and services continues to grow. So long as momentum continues in its fast-growing commercial segment, this is a company with a valuation that certainly may be possible to grow into.
Of course, valuation is the concern for most investors in Palantir right now. Trading at around 80-times forward earnings and 26-times sales, it’s not cheap.
The question is whether growth can continue to accelerate alongside margins. If that happens, this is a stock that could be poised for continued upside, as more investors look for AI exposure moving forward.
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) and positions in the securities mentioned in this article.
