Data analytics software maker Palantir Technologies delivered third-quarter earnings that topped estimates while revenue handily beat Wall Street targets amid strong U.S. government growth. Palantir stock jumped, hitting a new all-time high, as December-quarter revenue guidance came in well above expectations.
The company reported earnings after the market close on Monday.
For the quarter ended Sept. 30, Palantir earnings using generally accepted accounting principles, or GAAP, were 10 cents a share, up 43% from a year earlier. Revenue rose 30% to $725.5 million, the software maker said.
Analysts had predicted Palantir earnings of 9 cents a share on revenue of $703.4 million.
In Q3, net income doubled to $144 million from a year earlier.
Artificial Intelligence Platform
William Blair analyst Louie DiPalma in a report said "the government division's two large contract wins this year (MAVEN and TITAN)" drove the Q3 beat. "Traditionally, the commercial division has been the investor focus," he added. "Investors may give Palantir a free pass as U.S. commercial exceeded international commercial and management deemphasizes the importance of the international commercial division."
Palantir has already mined the AI opportunity with government customers for intelligence gathering, counterterrorism and military purposes. Now Palantir aims to use generative AI to spur growth in the commercial market. The software maker has expanded into health care, energy and manufacturing.
Also, Palantir rolled out its "Artificial Intelligence Platform" in early 2023.
At Deutsche Bank, analyst Brad Zelnick said in a report: "Palantir is among a handful of infrastructure software companies that have started to meaningfully monetize generative AI, where its competitive positioning benefits from longtime investment and deep expertise in complex data integration, and particularly its reputation for data security built into its ontology."
He added: "Similar to the other early leaders, Palantir's Q3 results underscore AI value increasingly being realized at the application layer of the tech stack."
At Morgan Stanley, analyst Keith Weiss removed his under-weight rating on PLTR stock. In a report, Weiss said he will reevaluate the software stock.
"In sum, the company has marched toward a rare rule of 68 profile with revenue growth of 30% year-over-year seemingly more sustainable and operating margins of 38%," he said. "The trendlines in these metrics have been building for a few quarters suggesting that Palantir is
emerging as a platform of choice in this stage of the generative AI cycle."
Palantir Stock: Non-U.S. Commercial Growth Slows
On its earnings call with analysts, Palantir said total Q3 government sales rose 33% to $408 million while total commercial sales rose 27% to $317 million. Analysts had estimated total government sales of $378 million and commercial revenue of $328.5 million.
Also, Palantir said U.S. government sales rose 40% to $320 million while U.S. commercial sales rose 54% to $179 million.
For the current quarter ending in December, Palantir says it expects revenue in a range of $767 million to $771 million. Analysts had predicted sales of $745 million.
Full-Year Guidance Raised
"For full year 2024, we are raising our revenue guidance to between $2.805 billion and $2.809 billion," said Chief Financial Officer David Glazer. "We are raising our adjusted income from operations guidance to between $1.054 billion and $1.058 billion. We are raising our adjusted free cash flow guidance to an excess of $1 billion and we continue to expect GAAP operating income and net income in each quarter of this year."
On the stock market today, Palantir stock jumped 22.5% to 50.74, a new all-time high, in midday trading.
Heading into the Palantir earnings report, shares were up 142% in 2024.
Zelnick said: "While Palantir reported a strong U.S. government led quarter and continues to show traction with AIP beyond our expectations, we believe this is exceedingly reflected in the current valuation of PLTR shares."
Further, Palantir stock has outperformed since 2023 amid buzz over generative artificial intelligence technology.
Palantir Stock: Technical Ratings
Palantir stock holds a perfect Composite Rating of 99, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
As of Nov. 4, Palantir stock is extended above an entry point of 29.83, according to MarketSurge chart analysis.
Palantir is among the top AI stocks to watch.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
