Shares in Palantir Technologies soared on Tuesday as analysts debated whether upside from generative artificial intelligence deployments has kicked in for the maker of data analytics software. Bulls on PLTR stock tout full-year 2024 revenue guidance that came in above views amid strong growth in the commercial market.
On the stock market today, PLTR stock soared 30.8% to close at 21.87. With the gain, shares closed slightly above a 5% buy zone with a 20.24 entry point from a cup base. Also, Palantir stock reclaimed its 50-day moving average after a failed test Monday. Shares hit an intraday high of 22.18 on Tuesday.
Palantir late Monday reported fourth-quarter earnings that met estimates while revenue topped Wall Street targets.
"Palantir reported generally good Q4 results, with signs of growing AI momentum, although there were some puts and takes," said Mizuho Securities analyst Matthew Broome in a report. "Revenue showed modest upside, driven by very strong U.S. commercial growth of 70% year-over-year, with generative AI a significant catalyst. However, the government business continued to drag, and commercial customers in Europe are not engaging in AI."
Further, Palantir rolled out its "Artificial Intelligence Platform" in early 2023.
PLTR Stock: AI 'Boot Camps' Take Off
Palantir's growth in the government market has slowed. It's aiming to offset that with new customers in the commercial market, such as health care. Also, it's upgrading products with generative artificial intelligence tools.
"Palantir's Artificial Intelligence Platform is still in its infancy and already contributing in a meaningful way," said Bank of America analyst Mariana Perez Mora in a report. Mora noted specialized programs to get companies up to speed on AI capabilities.
She added: "The newest boot camp-like pilot approach is accelerating PLTR's go-to-market strategy and expanding its addressable market. Since launched last October, PLTR has completed 560+ AIP boot camps across 465 organizations. The company has run more than 200 use cases with AI applications across defense, healthcare, telecom, insurance, car rental, finance, pharma, manufacturing and others."
For the quarter ended Dec. 31, Palantir earnings using generally accepted accounting principles, or GAAP, were 8 cents a share, up 100% from a year earlier. Revenue rose 20% to $608 million, the maker of data analytics software said.
Analysts had predicted earnings of 8 cents a share on revenue of $603 million. Denver-based Palantir said government revenue rose 11% to $324 million, missing estimates of $333 million in sales. Commercial revenue rose 32% to $284 million, topping estimates of $271 million.
One-time items contributed to the Q4 revenue beat, cautioned Morgan Stanley analyst Keith Weiss in a report.
"Palantir's Q4 results illustrated multiple fundamental trendlines within the company, many seeming to pull in different directions," Weiss said in a report. "U.S. commercial customer adds picked up nicely in the quarter and overall billings/bookings growth was very strong. But, absent revenue catch up on two deals and upside on strategic investments, revenues likely would have come in light of consensus expectations."
Palantir Stock: 2024 Guidance Beats
For full-year 2024, Palantir said it expects revenue in a range of $2.652 billion to $2.668 billion. Analysts had predicted sales of $2.64 billion, or 19% growth. The company forecast commercial revenue growth of 40% in the U.S., well above estimates.
Jefferies analyst Brent Thill on Tuesday upgraded PLTR stock to hold from under-perform.
"Palantir delivered an impressive Q4, led by backlog and U.S. commercial growth acceleration," Thill said in a report. "The highlight was the introduction of free cash flow guidance, which was 34% above estimates. We are impressed with AI Platform (AIP) ramping faster than our initial expectations and believe it's appropriate to upgrade shares to reflect the momentum."
At RBC Capital, analyst Rishi Jaluria maintains an under-perform rating.
"On the one hand, U.S. commercial growth and profitability results/guidance outperformed consensus," he said in a report. "On the other hand, overall Q4 revenue upside was limited (government missed consensus) and 2024 revenue guidance seems imprudent to us."
PLTR Stock: AI Opportunity
In a letter to shareholders, Chief Executive Alex Karp said: "For 2024, as a result of our sustained and growing profitability, we now see a path toward $800 million to $1 billion in adjusted free cash flow."
"We remain committed to building a business that will survive and thrive in any type of macroeconomic environment," he added. "As of the end of 2023, we maintained $3.7 billion in cash, cash equivalents, and U.S. treasuries, representing an increase of $1.1 billion from the year before."
Palantir stock surged 167% in 2023 amid buzz over generative artificial intelligence technology.
Meanwhile, Palantir has utilized predictive AI with government customers for intelligence gathering, counterterrorism and military purposes. It's now targeting generative AI applications in health care, energy and manufacturing.
But Palantir has not disclosed pricing for AI products. In addition, bearish analysts say Palantir needs to show more progress developing new revenue streams from generative AI.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
