Palantir’s stock (PLTR) skyrocketed over 30% on Tuesday, reflecting investor excitement over the defense software maker’s recent strides in artificial intelligence (AI) technology.
During the company’s earnings call on Monday, Palantir’s chief revenue officer, Ryan Taylor, expressed astonishment at the level of customer enthusiasm and demand for AI platforms in the US commercial sector. Palantir’s Artificial Intelligence Platform (AIP) was a focal point of the call, cited nearly 50 times, and is expected to drive nearly 40% growth in US commercial revenue in 2024.
Despite concerns about overvaluation, Palantir’s stock has surged over 100% in the past year, fueled by the broader AI fervor that has propelled many tech stocks. Analysts like Malik Ahmed Khan from Morningstar express bullishness on Palantir’s prospects but acknowledge challenges in justifying its current valuation.
Jefferies equity analyst Brent Thill, initially bearish on Palantir, revised his rating to Hold after recognizing the strong growth of AIP. However, he remains cautious about the stock’s valuation, which trades at a premium to the large-cap average.
The enthusiasm for AI extends beyond Palantir. Goldman Sachs raised its price target on Nvidia (NVDA), citing robust AI demand, while IBM and Microsoft have also benefited from AI-driven revenue growth. The recent performance of tech giants like AMD and Microsoft, hovering near all-time highs, underscores the market’s ongoing faith in AI’s potential.
However, questions linger about the sustainability of AI euphoria. Investors wonder when the price of AI-related assets will exceed their perceived value. Khan suggests that economic performance will play a crucial role in determining investor sentiment towards AI investments, with a strong economy likely to sustain enthusiasm while economic downturns could prompt a reevaluation of investment strategies.
In summary, Palantir’s surge exemplifies the enduring investor appetite for AI technologies, driving optimism despite valuation concerns and uncertainties about the broader economic outlook.
