Shares in Palantir Technologies plunged Tuesday after the software maker reported second-quarter profit and sales that met analyst estimates. The company also announced a $1 billion buyback for PLTR stock, which has soared amid buzz over artificial intelligence.
Palantir stock dropped 5.3% to close at 17.04 on the stock market today.
Investors apparently focused on a slowdown in sales growth. One analyst noted lackluster guidance for PLTR stock amid many AI-related announcements.
"Commercial revenue decelerated to 10% year-over-year growth vs. 15% in Q1," Jefferies analyst Brent Thill said in a note to clients. "Government revenue decelerated to 15% year-over-year vs. 20% in Q1."
But he added: "Profitability and the prospect of AI tailwinds took the spotlight, with a 3rd straight quarter of GAAP profitability and significant customer interest around AI Platform adoption"
Palantir Stock Swings To Profitability
Palantir reported June-quarter results after the market close on Monday. For the period ended June 30, Palantir earnings on an adjusted basis were 5 cents per share. That was on target with analyst expectations, and up from a 1-cent loss a year earlier.
Revenue rose 13% to $533 million, the maker of data analytics software said. That also met Wall Street targets. Revenue included investments in special-purpose acquisition companies.
Denver-based Palantir said government customer revenue climbed 15% to $302 million, in line with estimates. Commercial customer revenue rose 10% to $232 million.
Palantir gets nearly 60% of its revenue from government agencies. In addition, the software maker has expanded into the health care, energy and manufacturing sectors.
PLTR Stock: Forecasts For Quarter, Year
For the current quarter ending in September, Palantir predicts revenue of $555 million vs. analyst estimates of $553 million. For full-year 2023, Palantir put the midpoint of its revenue outlook at $2.21 billion.
As of Friday's market close, Palantir stock had jumped 183% thus far this year as investors chase AI stocks. PLTR stock hit a 52-week intraday high on July 19.
Further, Palantir has been profitable using generally accepted accounting principles, or GAAP, for three straight quarters.
Palantir Stock: AI Pilot Programs
Meanwhile, Palantir has told analysts that new AI-related pilot programs are underway. However, it's unclear when those programs would convert into revenue-generating programs.
With government customers, Palantir for two decades has used AI tools for intelligence gathering, counterterrorism and military purposes. Also, those AI tools relied upon pattern recognition to create predictive models.
The new buzz is about generative AI. It produces media content, drug protein sequencing, computer programming code and many other forms of digital data.
Further, Palantir is integrating the human-friendly, large language models used in generative AI into its software platform. Rivals also are doing the same thing.
"Palantir's top-line results remain uneven as Q2 revenue of $533 million came just in line with the high end of guidance after adjusting for upside in strategic investments," Morgan Stanley analyst Keith Weiss said in his note to clients.
PLTR Stock: Guidance Underwhelming?
Meanwhile, Palantir has not revealed pricing for its new AI products.
Weiss added: "Weakness in underlying metrics and lack of a clear monetization strategy for AIP (artificial intelligence platform) continues to leave the debate on the trajectory of longer term growth unresolved."
At Deutsche Bank, analyst Brad Zelnick said in a report: "Palantir reported in-line yet still decelerating (second-quarter) results, though typical deal lumpiness and opaqueness on backlog and services mix make it difficult to fully track the company's progress."
He added: "Headline revenue exceeded the midpoint of guidance by $3 million and 2023 was raised by only $2 million, despite bullishness around the company's AI platform."
PLTR stock holds a perfect Relative Strength Rating of 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
