The market’s “show me” stance on Palantir Technologies (NYSE:PLTR) is likely to change down the road but not in the immediate future. In light of a recent development, though, our optimism for Palantir stock has received a boost. Last week, the company entered a fortuitous partnership.
The market’s reaction to this news was pretty muted, yet don’t let that make you dismiss this development as a “nothing burger.” While this partnership news may not be huge by itself, it may help this software powerhouse make a full return to the high-growth fast lane.
PLTR Stock: The Latest Big News
On April 4, Palantir Technologies announced it had entered a partnership with software giant Oracle (NASDAQ:ORCL), that will make Palantir’s enterprise software platforms available through Oracle’s cloud computing platform.
Yes, Oracle’s cloud computing business may not be as large as the “Magnificent Seven”-owned cloud computing giants you may be familiar with. However, as Barron’s noted in its article on the partnership, Oracle’s cloud segment has been grabbing market share previously held by the competitors in recent quarters.
Again, this news hasn’t exactly resulted in the market going bananas again over Palantir stock, yet it’s another promising sign, when it comes to the growth of Palantir’s budding Artificial Intelligence Platform unit.
Launched only last year, the rollout of AIP has already resulted in strong year-over-year revenue growth for Palantir’s commercial segment.
Commercial sales came in at $131 million during Q4 2023, 70% above results during Q4 2022. This partnership will only help to increase the reach of both AIP and Palantir’s longstanding software platforms.
This deal also includes a cross-selling agreement between the two companies. Cross-selling may help not just commercial sales growth, but governmental sales growth as well.
What this Means for Palantir Shares
As also noted in prior Palantir stock coverage, investors remain very unsure about the sustainability of PLTR’s growth, and whether future growth justifies the stock’s currently-high forward earnings multiple of 70.3.
While not the only factor at play, the collaboration may give Palantir an even greater chance of not just meeting, but beating, expectations in the coming quarters. What does this mean for Palantir shares? Between now and the end of 2024, PLTR could add more to its 33.75% in year-to-date gains.
The sky is the limit over several years. This may sound hyperbolic at first, but here’s how. The Oracle deal could boost top-line growth. The top end of sell-side sales forecasts already call for revenue growth to rise by nearly 28% compared to 2024 consensus.
Continued growth in the 20-30% range could greatly impact Palantir’s profitability. Investors may already factor in this potential as highly likely, even before sales surge. Rather than being at risk of multiple compression, additional multiple expansion is more likely if this scenario plays out.
Bottom Line: Buy While the Market Yawns
Today’s market may not be overly excited about the Palantir-Oracle partnership, but this lack of enthusiasm works to your advantage. Buy in now, while PLTR still languishes in the low-$20s per share, could prove to be a very profitable move in hindsight.
While yawning right now, investors could soon again be brimming with excitement. It may not take much in the way of positive surprises to send PLTR back to its high-water mark of $39 per share. In the next year or two, a move to $40, $45, or even $50 per share may be within reach.
Although you should still keep in mind that shares may be subject to immediate-term volatility, there’s now even more reason to feel free to begin accumulating PLTR stock, at and especially below current prices.
PLTR 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.
