Palantir Technologies (PLTR) has become a focal point for both bulls and bears, sparking debates on aspects ranging from improved profitability to decelerating revenue growth. Amidst this discussion, the spotlight is on the artificial intelligence (AI) outlook and its potential impact on PLTR stock.
Market Performance: Palantir stock has surged by 175% this year, riding the Nasdaq composite’s upward momentum, which recorded a remarkable 45% gain in 2023 as of December 26. Despite hitting a new 52-week high on November 21, the stock faced a reversal following a United Kingdom contract’s underwhelming size.
AI as a Growth Driver: PLTR stock enthusiasts highlight artificial intelligence software as a key growth driver. Palantir has leveraged AI opportunities with government clients for intelligence, counterterrorism, and military purposes. The company expanded its reach into healthcare, energy, and manufacturing, introducing the “Artificial Intelligence Platform” early this year. As of mid-September, the platform boasts 150 users, marking a 50% increase within the last month.
Fundamentals and Governance: Palantir has announced a $1 billion stock buyback, but no shares were repurchased in the September quarter. Trading below its all-time intraday high of $45 in January 2021, PLTR stock faces questions about its fundamentals. The governance structure, with long-term control held by CEO Alex Karp and co-founder Peter Thiel, adds another layer of complexity.
Market Segmentation: Palantir operates through three platforms: Palantir Gotham (for government agencies), Palantir Metropolis (for banks and financial services), and Palantir Foundry (for corporate clients). Government agencies contribute nearly 60% of Palantir’s revenue, prompting concerns about decelerating growth.
Financial Snapshot: In the quarter ending September 30, Palantir reported earnings of 7 cents on an adjusted basis, with revenue rising 17% to $558 million. Government revenue increased by 12%, falling short of estimates, while commercial market revenue climbed 23%, surpassing expectations.
Partnerships and Acquisitions: Palantir expanded its cloud computing partnership with Microsoft and formed a global partnership with IBM to accelerate corporate adoption of AI software. Acquiring full ownership of a joint venture in Japan and consolidating its revenue marked strategic moves for Palantir.
Technical Analysis: PLTR stock holds a Relative Strength Rating of 97 and a Composite Rating of 95 out of 99. The Accumulation/Distribution Rating is B-minus, indicating neutral institutional activity. Despite a cup base with an entry point of 20.24, as of December 26, shares are not in a buy zone.
Conclusion: As the AI landscape evolves, Palantir’s fate is intertwined with market dynamics, government contracts, and its ability to diversify revenue streams. The debate continues, making PLTR a stock to watch closely in the evolving AI market.
