For most of the past month, economic worries have affected the performance of Palantir Technologies (NYSE:PLTR). Like other top AI stocks, Palantir stock has experienced heavy volatility as of late.
However, following the AI software company’s latest quarterly earnings release, you may be thinking the “AI bust” dust is settling with PLTR. Why? With results coming in strongly, shares have made a big leap back to prior price levels.
Trading in the mid-$20s per share in the lead-up to earnings, as of this writing Palantir has zoomed back to around $28 per share. With this, the question among many is whether this will continue. After all, this could easily end up being little more than a post-earnings relief rally.
Even so, while that may be true, irrespective of Palantir’s near-term prospects, there’s a clear takeaway to be had regarding the company’s latest results, and it bodes well for the long-term.
Palantir Stock, Recent Earnings, and the Start of a Comeback
Post-market on Aug. 5, Palantir Technologies released its quarterly numbers for the period ending June 30, 2024.
For the quarter, Palantir reported revenue of $678 million, and earnings of 6 cents per share. Both figures came in ahead of forecasts, and represented revenue and earnings growth of 27% and 500%, respectively.
That’s not all. Besides the revenue and earnings beat, there were some very promising details regarding both the company’s commercial and governmental businesses.
During the quarter, commercial sales rose 33%, and customer count grew 41%. Clearly, the rollout of Palantir’s Artificial Intelligence Platform continues to go off without a hitch.
As for the governmental business, last quarter represented another period of growth re-acceleration. Governmental sales were up 23% year-over-year, and up by 11% quarter-over-quarter.
With both segments reporting vigorous growth, there’s now even more evidence that the Palantir growth story, driven in large part by the generative artificial intelligence boom, remains intact.
Hence, it’s not surprising Palantir stock is zooming back higher following these numbers. Weakness could soon rear its ugly head again, but various factors suggest a possible stronger path back to prior price levels, and then some, compared to some other AI contenders.
A Path Back to $39 Per Share (and Beyond)
Concerns about Palantir stock have eased a bit, but that doesn’t mean that the market is now fully over recent worries about GenAI. If a further slowdown in economic growth, or worse, a recession, takes shape, it may just well lead to a slowdown in commercial adoption of GenAI technology.
Still, it’s possible that not even this could stymie a Palantir comeback. A slowdown may hurt demand for GenAI’s use in areas where its accuracy and cost-effectiveness remains questionable,
However, Palantir has clearly established a substantive use case for not just its AIP for Business platform, but for its AIP for Defense platform as well.
Also, Palantir could counter slower-than-expected growth in the years ahead. So far, this company has prioritized maximum growth over maximum profitability.
Much like what top tech firms did following the 2022 tech sector slowdown, Palantir’s focus could shift towards profit-maximization strategy.
Palantir could take its foot off the growth gas pedal a little bit and make impactful cost savings decisions. The company’s high operating leverages means this could lead to outsized earnings growth.
In turn, this may help shares to keep climbing. Perhaps, back to PLTR’s high-water mark of $39 per share.
The Verdict on PLTR
While the jury’s still out whether Palantir’s post-earnings rebound will prove temporary, as the long-term bull case has improved rather than taken a turn for the worse, there’s little reason to take profit or minimize losses, by selling into the latest round of strength.
Barring any developments that severely challenge the growth narrative still at hand with PLTR, there’s no issue with “letting it ride” when it comes to a position. As for entering or adding to a position, admittedly it’s much more hazy.
Near-term fears could mean PLTR falls back down to a can’t miss price, before resuming its comeback. Then again, this may not play out. It all depends on how macro developments, and how the market reacts to them, play out from here.
However, if you can stomach the volatility, feel free to add or increase exposure at current prices, with the full knowledge that additional near-term weakness for Palantir stock represents an opportunity, not necessarily a warning.
Palantir stock earns a B rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in PLTR. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
