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Palantir Technologies issued an update on its FY 2024 earnings guidance on Monday, February, 5th. The company provided earnings per share guidance of for the period. The company issued revenue guidance of $2.7 billion-$2.7 billion, compared to the consensus revenue estimate of $2.7 billion. Palantir Technologies’ stock was trading at $17.17 at the beginning of the year. Since then, PLTR shares have increased by 36.8% and is now trading at $23.49. Government revenue accounts for a big slice of Palantir’s top line, and this could offer proof to investors that there’s still plenty of growth potential in that area of its business as well when it comes to AI.
But given the stock’s expensive valuation, investors have arguably already been paying for that growth. At 27 times revenue and nearly 80 times expected future earnings, the stock comes priced at a huge premium. Continued growth and deals are why investors have been bullish on Palantir’s stock, to begin with, and that is a key reason its price remains as high as it is. Palantir’s commercial businesses, meanwhile, has been growing at a much faster rate.
The Titan contract is expected to add $89 million to Palantir’s revenue this year and should improve the company’s growth rate in its government segment. Palantir Technologies Inc. is an SaaS company focused on AI and big data analytics. It was founded in 2003 in Denver, Co by well-known investors Peter Thiel and Stephen Cohen among others. The company’s goal is to augment human intelligence with data-gathering and analytic tools that can change the world for the better. As of 2022, Stephen Cohen, co-founder Alexander Karp, and Peter Thiel were president, CEO, and Chairman respectively. Flashback to a year earlier, and Palantir’s growth rate was much more impressive on the government side.
Earnings and Valuation
Another way to compare Palantir is by evaluating expected revenue, which may be more appropriate given the fact that many of these companies aren’t generating much profit just yet. Upgrade to MarketBeat All Access to add more stocks to your watchlist. (PLTR) raised $0 in an initial public offering (IPO) on Wednesday, September 30th 2020. The company is scheduled to release its next quarterly earnings announcement on Monday, May 13th 2024. Originally intended as a tool for the Federal Government, the company has since expanded to serve state and local governments as well as private corporations.
Here’s how Palantir’s valuation compares to those of other stocks that are big on analytics and can benefit from AI. When it comes to fast-growing companies, you’re often https://www.wallstreetacademy.net/ going to end up paying a premium if you want to own shares of a business. You’re not going to see Palantir’s stock fall to a price-to-earnings (P/E) multiple of 15.
- Originally intended as a tool for the Federal Government, the company has since expanded to serve state and local governments as well as private corporations.
- And on a quarter-over-quarter basis, it only rose by 5% to $324 million.
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- Continued growth and deals are why investors have been bullish on Palantir’s stock, to begin with, and that is a key reason its price remains as high as it is.
- Strong earnings numbers and an encouraging outlook for the data analytics company — thanks in part to artificial intelligence (AI) — have growth investors bullish on the stock’s long-term future.
This new deal did help give the stock a boost but it’s not significant enough of a development to suggest this will be a catalyst that helps Palantir’s stock soar higher. Palantir does have a lot of long-term potential but its growth rate may not be high enough to justify its steep valuation. At such a high price, investors may be better off pursuing other growth stocks instead. Investors’ willingness to pay a premium for a business may ultimately come down to how fast it is growing. Here’s how these stocks fare against one another in terms of their quarterly growth rates. For AI stocks, investors have been paying high multiples based on their expected future earnings, effectively paying in advance for future growth, which can be risky if expectations don’t match up to reality.
In the press release announcing the deal, Palantir says this is the first «AI-defined vehicle» for the Army. On March 6, Palantir announced it had won a contract with the Army. The deal is worth $178.4 million and involves the development of the Army’s Tactical Intelligence Targeting Access Node (Titan), which utilizes AI and machine learning. Titan’s goal is, «to provide actionable targeting information for enhanced mission command and long range precision fires.» Investors who bought $1,000 worth of Palantir’s shares at the IPO in September 2020 would now be looking at an investment worth $2,488. Here Palantir’s valuation is right in the middle of the pack, suggesting that its price is fair compared to the prices of other comparable stocks.
Popular Tools
As a reminder, the driver of a stock’s value is the sum of its future cash flows discounted back to today. With lower interest rates, investors can apply higher valuations to their stocks. No wonder so many in the investment community are optimistic about 2024.
Palantir Technologies (PLTR -3.85%) has been a popular stock with growth investors in the past year. The data analytics company helps both government and commercial customers make better decisions through the use of its platform. And last year, the company launched an artificial intelligence (AI) platform, which can improve and expedite the decision-making process for its customers even further. Shares of Palantir Technologies (PLTR -3.85%) have been hot this year, trading up around 40%. Strong earnings numbers and an encouraging outlook for the data analytics company — thanks in part to artificial intelligence (AI) — have growth investors bullish on the stock’s long-term future. Palantir reaching a deal with the Army on a new AI-powered deal is great news for the business.
Palantir’s business has only recently become profitable; it has posted positive net income for five consecutive quarters. While its forward P/E multiple appears high, it could improve in the future. But even based on this metric, it compares favorably against other data-focused AI stocks.
Why Palantir (PLTR) Stock Is Trading Up Today
Add them to your StockStory watchlist and every time a stock we cover moves more than 5%, we provide you with a timely explanation straight to your inbox. Palantir Apollo is an operating system designed to give continuous delivery and deployment of safe, secure Internet access across all operating environments. The system is 1 of 5 recognized by the Department of Defense as a Mission Critical National Security System and used by businesses and organizations for autonomous software deployment. Among its advantages, the system can speed up the development of new software by as much as 50% simply by securing access to sensitive information and networks. For Palantir, the big takeaway is not just the financial payout from the deal but, perhaps more importantly, the proof that its AI platform is winning over customers.
While total revenue only rose by 18%, government-related contracts were driving much of the growth rather than slowing it down; a year ago, government revenue was rising at a rate of 23%. Users are able to aggregate data from hundreds of inputs and funnel them into a single view for rapid decision-making and execution. The tool, which looks for and analyzes hidden patterns in deep data sets, has been used for “predictive policing” and has drawn some criticism because of it.
The goal is to generate alpha, or a competitive advantage, for its clients so they can succeed in a rapidly changing environment. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies.
12 equities research analysts have issued 12-month target prices for Palantir Technologies’ stock. Their PLTR share price targets range from $5.00 to $35.00. On average, they anticipate the company’s stock price to reach $18.21 in the next twelve months. This suggests that the stock has a possible downside of 22.5%. View analysts price targets for PLTR or view top-rated stocks among Wall Street analysts.
