There is a lot for bulls and bears to discuss Palantir Technologies (PLTR). Bulls point to improving profitability for PLTR stock. Bears are focused on slowing Palantir stock’s revenue growth. Then there are rumored artificial intelligence stocks that the data analysis software maker should consider.
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First quarter results for Palantir stock are expected on May 6th. Analysts forecast earnings per share of 8 cents, up 60% from a year ago. Sales are expected to rise 17% to $615 million.
As of April 24, PLTR stock is up 28% in 2024. However, shares have declined from a high of 27.50 on March 7. Palantir stock has fallen off the IBD 50 list of growth companies.
Palantir stock is trading below the 50-day line
Additionally, Palantir stock is trading below its 50-day moving average.
When it comes to news, there’s plenty for investors to think about. oracle (ORCL) and Palantir have announced a cloud computing alliance.
Additionally, Palantir has received a new $178 million contract from the U.S. Army for Project TITAN, an artificial intelligence battlefield system.
At a customer conference on March 7, Palantir unveiled its “artificial intelligence platform,” which will launch in early 2023. The AI platform has gained traction among commercial customers, Palantir said at the conference. Among other things, new customers were mentioned General Mills (GIS), CBS and Aramark (ARMK).
“The event was attended by over 60 clients who presented their work in the AIP space,” Jefferies analyst Brent Thill said in a report. Given the strong rise in PLTR stock, Thill added: “The biggest concern remains its valuation at 18 times calendar year 2025 (estimated) sales, making it the most expensive name in our coverage.”
In the meantime, here’s a look at Palantir’s international business, including its AI development in Europe.
Palantir shares jumped after the company reported fourth-quarter profit that met estimates while revenue beat Wall Street targets.
PLTR Stock: Will AI Be a Growth Driver?
Additionally, Palantir stock rose 167% in 2023. The Nasdaq Composite rose 43% while the S&P 500 gained 24%.
Additionally, Palantir is one of the AI stocks to keep an eye on.
PLTR stock bulls point to artificial intelligence software as a growth driver. Palantir has already leveraged AI capabilities with government customers for intelligence gathering, counterterrorism and military purposes.
Now Palantir wants to use generative AI to drive growth in the commercial market. The software maker has expanded into healthcare, energy and manufacturing.
Palantir has not announced pricing for AI products. Some analysts say Palantir needs to show progress in developing new revenue streams through generative AI.
PLTR Stock: Governance Structure
In 2023, Palantir announced a $1 billion repurchase of PLTR shares. However, as of December 31, the company had not purchased any shares.
Additionally, PLTR stock is trading well below the software maker’s all-time intraday high of $45, set in late January 2021.
Meanwhile, Palantir’s governance structure gives Karp and co-founder Peter Thiel long-term control of the company through super voting rights.
The company name is derived from the Palantiri, crystal ball-like “seeing stones” from the book and film series “The Lord of the Rings”. Palantir means “one who sees from a distance.”
Additionally, Palantir engineers often customize software to meet customer needs. This increases the time it takes to ramp up “digital transformation” projects. So after Palantir receives an order, it may take a while to generate revenue.
The Denver-based company offers three platforms. One of them is Palantir Gotham, which is primarily used by government agencies. There is Palantir Metropolis for banks, financial service providers and hedge funds. And Palantir Foundry is used by corporate customers.
The government’s largest market
Palantir receives nearly 60% of its revenue from government agencies. The slowdown in sales growth is a problem. In 2022, revenue growth slowed to 24%, from 40% in 2021 and 47% in 2020. In 2023, revenue increased 17% year-over-year to $2.23 billion.
For the quarter ended Dec. 31, Palantir’s earnings under generally accepted accounting principles (GAAP) were 8 cents per share, up 100% from a year earlier. Revenue rose 20% to $608 million, the data analytics software maker said.
Analysts had forecast profit of 8 cents per share on revenue of $603 million. Denver-based Palantir said state revenue rose 11% to $324 million, missing estimates of $333 million. Commercial revenue rose 32% to $284 million, beating estimates of $271 million.
For full-year 2024, Palantir expects revenue in the range of $2.652 billion to $2.668 billion. Analysts had forecast revenue of $2.64 billion, or growth of 19%. The company forecast U.S. commercial revenue growth of 40%, well above estimates.
In a letter to shareholders, Chief Executive Officer Alex Karp said: “For 2024, we now see a path toward adjusted free cash flow of $800 million to $1 billion based on our sustained and growing profitability.”
At the end of 2023, Palantir had $3.7 billion in cash and cash equivalents on its balance sheet, up $1.1 billion from the previous year.
Palantir forges partnerships
In November 2022, Palantir acquired full ownership of a joint venture in Japan that distributes the company’s software. The largest customer is the Japanese insurance company Sompo Holdings.
Then in 2023, Palantir began consolidating revenue from the joint venture into its earnings reports.
Additionally, Palantir recently expanded its cloud computing partnership with Microsoft (MSFT), which is aimed at government agencies.
To accelerate enterprise adoption of artificial intelligence software, Palantir and IBM have formed a global partnership. As part of the agreement, Palantir also made its foundry software available to IBM’s cloud computing customers. The Foundry platform is a centralized data operating system that allows users to manage, filter, and visualize large data sets.
Palantir stock technical analysis
Palantir’s Relative Strength Rating is 96 out of a best possible 99.
Additionally, Palantir stock has a Composite Rating of 97 out of a best possible 99, according to IBD Stock Check-up.
IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
PLTR stock has an Accumulation/Distribution Rating of C-plus. This rating analyzes the price and volume changes of a stock over the last 13 weeks of trading. A+ indicates strong institutional buying; E means strong selling. Think of the grade C as neutral.
Meanwhile, Palantir stock is trading below its 50-day moving average, has no base and is not a buy.
Plus, check out IBD stock lists and other IBD content to find dozens more of the best stocks to buy or watch.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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