Palantir Technologies has undoubtedly been a thrilling investment opportunity, and it seems that the bulls are currently in control. The company’s data-analytics software has managed to maintain investors’ excitement about its ambitious plans with artificial intelligence.
Initially, Palantir’s boosted guidance seemed unlikely to sustain the impressive rally the stock had experienced so far this year. After-hours trading on Monday saw a dip of up to 10% in share prices. However, the stock quickly rebounded, erasing those losses.
As of Tuesday’s premarket trading, Palantir’s stock was up 0.1% and priced at $18.00. This year alone, the shares have nearly tripled in value, making it an incredible success story.
For the bullish investors, Palantir is on the cusp of a significant turning point with the introduction of its Artificial Intelligence Platform (AIP). During an earnings call, company executives expressed their delight about the “unprecedented” interest from customers since AIP’s launch ten weeks ago.
Furthermore, in the second quarter, Palantir reported a remarkable 38% increase in the number of customers compared to the previous year. This growth reflects the company’s strategic focus on expanding its revenue base by targeting more commercial clients rather than relying heavily on government contracts.
Palantir Faces Mixed Reviews Amidst AI Dominance
In recent discussions on Palantir’s performance, conflicting viewpoints have emerged regarding its position as a leader in the AI field. While some analysts maintain their optimism and praise the company’s expansion efforts, others express concern over its ability to effectively capitalize on the growing demand for AI technology.
The Gold Standard in AI
Wedbush analyst Daniel Ives remains a firm believer in Palantir’s capabilities, hailing the company as the “gold standard in AI.” He expresses confidence in Palantir’s strategy of venturing into the commercial space while maintaining a stronghold in the government sector. Ives upholds an Outperform rating on the stock with a price target of $25.
Revenue Growth Raises Questions
Despite Ives’ bullish stance, skeptics point to Palantir’s second-quarter revenue growth of only 13% compared to the previous year. Trading at 81 times its expected earnings for this year, the lackluster growth fails to impress these critics. In particular, D.A. Davidson’s Gil Luria emphasizes that Palantir needs to convert AI demand into accelerated growth. While Luria has raised the target price to $15 from $8.50, he maintains a Neutral rating. This new target still reflects an enterprise value-to-revenue multiple of approximately 13 times for this year, aligning Palantir with other high-growth profitable peers in the industry.
Addressing Revenue Guidance and Performance Obligations
Luria also highlights Palantir’s conservative approach to raising its full-year revenue guidance by just $2 million. Additionally, he notes that the company’s remaining performance obligations, which represent contracted revenue yet to be recognized, have declined by 20% compared to the same period last year.
As Palantir navigates its path forward, opinions on its overall performance and growth potential diverge. Analysts like Ives uphold their confidence in the company, while others like Luria urge caution, emphasizing the need for Palantir to leverage AI demand effectively. The market’s response to Palantir’s ongoing endeavors will undoubtedly shape its future trajectory.