Software company Palantir Technologies (NYSE: PLTR) participates in data science, artificial intelligence (AI) and machine learning, the demand for which is off the charts. The company’s technology is used in applications like anti-money laundering, automotive and mobility, data protection, defense, federal health, government financial, and much more, demonstrating just how versatile its software can be.
With technology stocks leading the broader markets higher in 2024, you may be looking to jump on the bandwagon. Investing in Palantir is one way to do that. Palantir isn’t a one-trick pony, as it’s been around for the long haul. With a $53 billion market cap, Palantir has been recognized as an industry leader in segments like data science, machine learning and even AI/ML platforms, rewarding investors with 41% year-to-date increase in the stock price. Here are 10 reasons you might want to consider buying Palantir stock now.
1.) Co-Founder at the Helm
Palantir was created in 2003 by several co-founders, including Alexander Karp, who has been called “sheer brilliant” by former CIA Director David Petraeus. Karp, who is CEO, has served in various executive capacities over the years. But one thing that has remained is that his presence has been a constant for over two decades, giving investors a sense of continuity and stability. Karp hasn’t taken his foot off the innovation pedal, and he is confident about the future performance of the company.
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2.) Peter Thiel
Most companies billionaire venture capitalist Peter Thiel touches turn to gold, including Palantir. Famous for founding PayPal and receiving a $100 million windfall at the IPO, Thiel is also a co-founder of Palantir, currently serving as Chairman. Earlier this year, Thiel sold approximately $175 million of his PLTR holdings, but considering his total holdings prior to selling of $3.4 billion, he is still heavily invested in the company. According to Bloomberg, Thiel holds 7% of Palantir, making it the single-biggest asset he owns.
3.) Clients and Partnerships Galore
Palantir requires entire events to unveil its newest customers, bootcamps, and product innovations. At the company’s latest AIPCon event, the fourth of its kind over the past 12 months, Palantir revealed the newest customers using its software, including high-profile companies like “United Airlines, Nebraska Medicine, AARP, Lear, Wendy’s QSCC, Edgescale AI and others.” Another new client is Tampa General Hospital, which is using Palantir’s data analytics and AI platform. Tampa Hospital CEO John Couris reportedly said, “Palantir is changing the DNA of our institution.”
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4.) AI Affiliation
Palantir is behind its own Artificial Intelligence Platform, or AIP. Many companies and government agencies have integrated Palantir’s AI tools, and the list is growing. At AIPCon, dozens of companies that use Palantir’s AIP volunteered to present to the audience on how they’re harnessing Palantir’s AI technology. Palantir’s AI events are a home run, helping to drive enterprise sales at a critical juncture in the industry.
5.) Revenue Growth
In Q1, Palantir generated revenue of $634 million, a 21% year-over-year increase. Investors should pay attention to the company’s commercial revenue, which has been on the rise. This is important because its U.S. government contract sales are not quite what they used to be, so Palantir will need to capture more sales from the enterprise segment to continue its growth trajectory. In Q1, Palantir made $150 million in sales from its commercial segment, a 40% increase year-over-year.
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6.) Net Income Growth
In Q1, Palantir reported record profits of $106 million, the best performance since the company’s inception. As Karp explained in an investor letter, “For comparison, we now earn more profit in a single quarter than the amount of revenue we generated in an entire year a little more than a decade ago.”
7.) Buying Opportunity
While Palantir’s stock is trading at a frothy valuation, that is typical for growth stocks. In early May, PLTR stock dipped by approximately 16% in response to a revenue forecast that fell below Wall Street’s bullish estimates. But Palantir has a habit of beating estimates, so the company could just be playing it cool for now. In the short term, Palantir’s Q2 revenue forecast is in the range of $649 million-$653 million, while its full year outlook is $2.68 billion-$2.69 billion. Long-term forecasts are even more bullish, including predictions for revenue to rise a whopping 150% over the next five years, or at a CAGR of 30% through 2028. Considering revenue is a driver of earnings growth, this forecast performance should underpin the rising Palantir stock price.
8.) Customer List
Palantir has an impressive customer list, one that includes U.S. government agencies like the FBI, FDA, NSA and CIA as well as many other government agencies. In fact, the U.S. government is Palantir’s largest client and has been relying on the company’s data to guide their decisions for years. Palantir recently inked a five-year partnership with the U.S. Department of Defense worth a cool $480 million. While new competitors have entered the fray for government contracts, Palantir continues to win over clients in the private sector. Three recent addition include General Mills, CBS and Aramark, all of which signed on for Palantir’s AI capabilities.
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9.) Stock Momentum
Palantir stock has soared 200% over the past 12 months. While most Wall Street analysts are cautious on PLTR, owing to its rich valuation, the stock has momentum on its side. Generative AI including chatbot demand isn’t going to subside anytime soon, as companies and governments alike continue to invest heavily in this area. Palantir has an established history with government agencies and is now focusing on expanding its enterprise business, which is likely to continue to drive growth at the company and the share price.
10.) Potential S&P 500 Index Inclusion
While Palantir is a multi-billion dollar company, it’s only been publicly traded since 2020. One achievement it has yet to attain is scoring a spot in the prestigious S&P 500 index. With a market cap of $53 billion, and its recently attained profitable status, Palantir could be a contender for this market barometer in the near future. If it does, the stock would have yet another catalyst for gains as it makes its way into more passive funds held by big and small investors.
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