Having nearly tripled in 2023, Palantir Technologies (NYSE:PLTR) stock looks to be on the right track, with more growth ahead.
PLTR stock is up 185% over the past year and has now gained 98% since its initial public offering in October 2020, which occurred during the volatile pandemic stock market rally. Having survived the bear market of 2022 and achieved profitability, Palantir and its share price are now moving in the right direction, presenting investors with an opportunity to buy a solid long-term growth stock.
Profitability Has Been Key
PLTR stock has been ripping higher since the company reported its first quarterly profit in February of this year. Palantir’s Q4 2022 earnings per share were 4 cents, exceeding the expected 3 cents.
After 20 years, the company’s profitability has arrived, boosting confidence in Palantir’s sustainable growth.
For its most recent financial results, covering the third quarter of 2023, Palantir beat Wall Street forecasts and raised its full-year revenue guidance.
The company’s share price responded by rising 20% in a single trading session. Palantir reported Q3 EPS of 7 cents compared to 6 cents that was expected by analysts.
Revenue in the quarter came in at $558 million versus $556 million that was anticipated. Sales increased 17% from a year ago, showing that growth is accelerating.
Commercial Business Growth
One of the knocks on Palantir since the company went public has been that it is too reliant on government contracts, particularly from the U.S. and United Kingdom.
There have even been accusations that the company spies on citizens for the governments it works for. Palantir, and its CEO Alex Karp have responded by working aggressively to shift Palantir’s work into the private sector and to take on more commercial contracts.
The pivot appears to be working as Palantir recently reported that its commercial revenue grew 33% year-over-year in Q3.
While much of the company’s work continues to be with government agencies, it is increasingly announcing deals such as the recent one with plastic waste upcycling specialist PlasCred Circular Innovations.
Of course, Palantir’s earnings also continue to be driven by new and extended government contracts, such as the $115 million extension it received from the U.S. Army.
AI Catalyst
If there’s a catalyst looming on the horizon for PLTR stock in 2024 and beyond, it is artificial intelligence . In June 2023, Palantir launched its Artificial Intelligence Platform (AIP) that has proven to be a hit with customers.
The number of users for the AIP tripled in Q3 alone. In five months since its launch, more than 300 organizations have signed up to use Palantir’s AIP. Palantir has said that it is aggressively investing in the Artificial Intelligence Platform in order to capitalize on demand.
Palantir says the AIP enhances its existing data analytics platform along with its machine learning technologies without sacrificing profit margins.
This makes Palantir different from other data analytics and cloud computing companies that are investing heavily in AI at the expense of their profit margins. Going forward, AI is expected to be a significant driver at Palantir as demand for the technology increases, and as the technology itself improves.
Buy PLTR Stock
Palantir has been a market leader in 2023 and looks well-positioned to continue growing into the future. Palantir’s profitability, commercial growth, and leadership in AI will drive sustainable long-term growth. Investors wanting to give their portfolio a boost with a strong growth stock should consider this data analytics company. PLTR stock is a buy.
— Joel Baglole
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Source: Investor Place