Palantir Technologies shares powered to a fresh all-time high in early Tuesday trading following a blowout earnings report that triggered a host of price target changes from analysts on Wall Street.
Palantir (PLTR) , which was added to the S&P 500 last month, has established itself as key player in the defense industry, with a host of contracts with domestic and international agencies that focus on its data-analytics and AI technologies.
It's also seeing rapid growth in its commercial division, which includes the testing and reworking of artificial-intelligence systems through its AIP Logic platform, as well as "boot camps" for companies that are scaling the new technology across its business processes.
The Denver group, founded by the tech investors Peter Thiel and Joe Lonsdale, boosted its full-year revenue forecast for the third time this year, thanks in part to outsized gains from its nonmilitary business.
The group's U.S. business saw revenue rise 44% over the three months ended in October to $499 million. Most of that, around $320 million, was from the government side, while commercial revenue grew at a faster rate, 54%, to $179 million.
Palantir/TheStreet
Palantir said it sees 2024 revenues in the region of $2.805 billion to $2.809 billion, an 8% improvement from its prior forecast, with operating income of around $1.055 billion.
Palantir's AI demand enjoys commercial boost
"Given how strong our results are, I almost feel like we should just go home," CEO Alex Karp told investors on a conference call late Monday.
“We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down," he said in a statement. "This is a U.S.-driven AI revolution that has taken full hold. The world will be divided between AI haves and have-nots. At Palantir, we plan to power the winners."
D.A. Davidson analyst Gil Luria, who boosted his price target on the group by $19 to $47 per share following last night's earnings report, cited "unrelenting demand" from its U.S. operations.
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"Palantir remains well positioned to benefit from surging enterprise interest in AI applications," he said. "AIP and boot camps continue to be highlighted as a key reason for growth with new and existing customers today as Palantir is able to establish production use cases with customers faster than before."
Wedbush analyst Dan Ives called the group's quarterly earnings "eye-popping" and noted that its AIP Logic platform "continues to drive pipeline growth".
"Despite the skeptics honing in on valuation for the past year, this was a major quarter to prove that Palantir’s partner ecosystem expansion and AIP bootcamps hit another gear as more use cases for its entire portfolio meet the rising demand for enterprise-scale generative AI solutions while gaining further share in the AI Revolution," said Ives said, who lifted his Palantir price target by $12 to $57 per share.
One analyst unconvinced, keeps Palantir at underperform
William Blair analyst Louie DiPalma, however, was more skeptical, reiterating his underperform rating on the stock, citing weakening overseas revenue and a reliance on "lumpy" government spending.
"While investors may give Palantir a free pass since U.S. commercial exceeded international commercial, management has been de-emphasizing the international commercial division, which has the slowest quarter growth rate in two years," DiPalma said.
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"Despite recent positive developments, the new 2024 revenue guidance is merely in line with consensus from two years ago," he added.
DiPalama also referenced the valuation concern cited by Wedbush's Ives. He noted that the stock trades at a $118 billion market cap, compared with just $38 billion for rival Snowflake, (SNOW) "although Snowflake has higher revenue ($3.5 billion vs. $2.8 billion for Palantir this fiscal year) and is growing at a similar rate in the same data analytics end-market."
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Palantir shares were marked 22.8% higher in early Tuesday trading to change hands at $50.87 each, a move that would extend the stock's six-month gain to around 101% and value the group at around $114 billion.
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