The AI industry has shown incredible growth prospects owing to AI integrations in a wide range of industries, from defense, education, technology, pharmaceuticals, and so many more. With the solid growth trajectory of the AI market, poised to grow at a CAGR of 35.7% to reach $1.34 trillion by 2030, the future of the AI industry seems extremely optimistic.
Amid this AI revolution, Palantir Technologies Inc. (PLTR) stands at the forefront owing to its aggressive expansion into AI capabilities and major contracts and partnerships in the pipeline. PLTR is well-positioned to benefit from the AI market’s explosive growth prospects and seems a wise choice for growth-focused investors.
The company’s impressive growth over the past year highlights its potential. The stock surged 204% in the past six months and an impressive 226.8% over the last year, closing at $64.35 in the latest trading session. These gains reflect PLTR’s ability to capitalize on the sector’s continued expansion.
So, let’s take a closer look at the factors that could influence PLTR’s performance in the near future.
Recent Developments
On November 15, PLTR announced the launch of its new Artificial intelligence Platform (AIP) for Developers features at its first Developer Conference, DevCon. With new releases like ontology SDK 2.0, new Platform APIs, Workflow Builder, and more, PLTR expects to enable new and faster development tooling and enhanced language expansiveness and place itself on the forefront of the AI revolution.
On November 13, PLTR announced the renewal of its multi-year enterprise agreement with the Rio Tinto Group (RIO), one of the world’s leading mining and metals groups. With this agreement, PLTR will grant RIO access to its AIP and expand its overall popularity in the AI market, enhancing its future growth prospects.
Sound Historical Growth
Over the past three years, PLTR’s revenue has grown at a CAGR of 22.7%. Meanwhile, its tangible book value rose at a CAGR of 26%.
Furthermore, during the same time frame, the company’s total assets and levered free cash flow grew at respective CAGRs of 21.4% and 15.1%. The sustained performance highlights the company’s strong growth trajectory over the last few years.
Strong Financials
For the fiscal third quarter that ended September 30, 2024, PLTR’s revenue increased 30% year-over-year to $725.52 million. Its adjusted income from operations grew 68.7% from the year-ago value to $275.52 million. Moreover, the company’s adjusted EBITDA increased 64.9% year-over-year to $283.60 million.
PLTR’s adjusted net income attributable to common stockholders and adjusted EPS rose 55.8% and 42.9% from the prior year’s quarter to $241.56 million and $0.10, respectively. As of September 30, 2024, PLTR’s total assets stood at $5.77 billion, compared to $4.52 billion on December 31, 2023.
Favorable Analyst Estimates
Analysts predict PLTR’s revenue and EPS for the fiscal fourth quarter (ending December 2024) to rise by 27.6% and 39% year-over-year, reaching $776.20 million and $0.11, respectively. The company has consistently exceeded the consensus revenue and EPS estimates in each of the four trailing quarters, which is noteworthy.
For the full fiscal year ending December 2024, PLTR’s revenue and EPS are expected to grow 25.5% and 51.5% from the previous year, reaching $2.79 billion and $0.38, respectively. The impressive growth reflects the company’s strong performance and ongoing upward momentum.
Looking further ahead to the next fiscal year ending in December 2025, PLTR is projected to see additional growth, with revenue and EPS forecasted to rise by 24.2% and 24.7%, reaching $3.47 billion and $0.47, respectively.
High Profitability
PLTR’s trailing-12-month gross profit margin of 81.10% is 60.5% higher than the industry average of 50.53%. Its trailing-12-month levered FCF margin stands at 29.64%, 164.8% higher than the industry average of 11.19%.
Additionally, PLTR’s trailing-12-month net income margin of 18.01% outperforms the industry average of 3.57% by 404.2%. Moreover, the company boasts a trailing-12-month EBITDA margin of 15.03%, which is 47.7% above the sector average of 10.17%.
POWR Ratings Reflects Optimism
PLTR’s fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree. Our proprietary rating system also evaluates each stock based on eight distinct categories.
PLTR has an A grade for Quality, which is justified by its higher-than-average profitability metrics. Also, it holds a solid B grade for Growth, showcasing consistent performance in cycles, backed by a robust history of growth.
Within the A-rated Software - SAAS industry, PLTR is ranked #15 out of 18 stocks. Beyond what is stated above, we have also given PLTR grades for Growth, Value, Momentum, Sentiment, and Stability. Get all PLTR ratings here.
Bottom Line
PLTR has marked its territory as a formidable force in the AI industry, owing to its expansion into AI capabilities and major contracts and partnerships in the pipeline. With a consistent track record of profitability, the company is well-positioned to capitalize on the growing AI market, further enhancing its competitive edge.
Given PLTR’s high profitability and its strategic position in the AI industry, it could be an attractive buy for investors seeking growth potential.
How Does Palantir Technologies Inc. (PLTR) Stack Up Against Its Peers?
Although PLTR’s near-term outlook appears sound, it may be worthwhile to explore its industry peers, who currently exhibit even stronger POWR Ratings. So, consider these three A (Strong Buy) or B-rated (Buy) stocks from the Software - SAAS industry:
DocuSign Inc. (DOCU)
Kaltura, Inc. (KLTR)
WM Holding Company, LLC (MAPS)
To explore more A or B-rated Software - SAAS stocks, click here.
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PLTR shares were trading at $64.94 per share on Monday morning, up $0.59 (+0.92%). Year-to-date, PLTR has gained 278.22%, versus a 27.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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