- PLTR garners 30% surge on back of terrific Q4 results.
- Palantir grew US commercial revenue by 70% YoY.
- Margins expand as revenue gains 20% from a year ago.
- Management raises full-year sales guidance.
Palantir (PLTR) stock on Tuesday is worth nearly one-third more than it was on Monday after the big data firm shot up following successful fourth-quarter earnings results. PLTR stock closed up 30.8% at $21.87 following a slam dunk of an earnings release late Monday.
This performance was the best PLTR shareholders have ever seen. It outdid the former record from January 22, 2021, that saw a 25.4% gain.
A growing customer base and robust commercial revenue growth is making Palantir less reliant on government contracts. This shift is causing the market to swarm PLTR stock as it now looks more likely that Palantir has an extremely long growth ramp ahead.
All three major US indices gained on Tuesday as US Treasury yields sank. The Dow Jones added 0.37%, while the S&P 500 closed up 0.23%. The NASDAQ Composite rose 0.07%.
Palantir stock earnings news
Palantir saw revenue of $608.4 million in the fourth quarter, $5.6 million ahead of an already healthy Wall Street consensus. Revenue has grown nearly 20% from a year ago, and Palantir also met consensus for earnings with $0.08 in adjusted EPS (earnings per share).
Commercial revenue climbed 32% YoY to $284 million, but the real story is US-specific commercial revenue. That latter segment surged 70% YoY as Palantir’s offering on the artificial intelligence (AI) front exploded. US commercial customers rose 55% from a year ago.
Government revenue of $324 million rose 11% from a year ago, while total customer count for both the Government and Commercial segments rose 35%.
“[T]he AI Revolution is driving [AI Platform] deal flow to a level we did not expect until 2025,” wrote Wedbush Securities analyst Dan Ives, who has a $25 price target on PLTR stock.
Even a notably skeptical analyst like Tyler Radke of Citi had to admit that Palantir had turned a corner. He raised his estimate of 2024 free cash flow by 55%.
Margins were the icing on the cake for Palantir. The company sports an adjusted free cash flow margin of 50%, an adjusted operating margin of 34%, and a GAAP profit margin of 15%.
Despite Q1 sales guidance that was slightly below consensus, Palantir raised the full-year forecast to between $2.652 billion and $2.66 billion.
AI stocks FAQs
First and foremost, artificial intelligence is an academic discipline that seeks to recreate the cognitive functions, logical understanding, perceptions and pattern recognition of humans in machines. Often abbreviated as AI, artificial intelligence has a number of sub-fields including artificial neural networks, machine learning or predictive analytics, symbolic reasoning, deep learning, natural language processing, speech recognition, image recognition and expert systems. The end goal of the entire field is the creation of artificial general intelligence or AGI. This means producing a machine that can solve arbitrary problems that it has not been trained to solve.
There are a number of different use cases for artificial intelligence. The most well-known of them are generative AI platforms that use training on large language models (LLMs) to answer text-based queries. These include ChatGPT and Google’s Bard platform. Midjourney is a program that generates original images based on user-created text. Other forms of AI utilize probabilistic techniques to determine a quality or perception of an entity, like Upstart’s lending platform, which uses an AI-enhanced credit rating system to determine credit worthiness of applicants by scouring the internet for data related to their career, wealth profile and relationships. Other types of AI use large databases from scientific studies to generate new ideas for possible pharmaceuticals to be tested in laboratories. YouTube, Spotify, Facebook and other content aggregators use AI applications to suggest personalized content to users by collecting and organizing data on their viewing habits.
Nvidia (NVDA) is a semiconductor company that builds both the AI-focused computer chips and some of the platforms that AI engineers use to build their applications. Many proponents view Nvidia as the pick-and-shovel play for the AI revolution since it builds the tools needed to carry out further applications of artificial intelligence. Palantir Technologies (PLTR) is a “big data” analytics company. It has large contracts with the US intelligence community, which uses its Gotham platform to sift through data and determine intelligence leads and inform on pattern recognition. Its Foundry product is used by major corporations to track employee and customer data for use in predictive analytics and discovering anomalies. Microsoft (MSFT) has a large stake in ChatGPT creator OpenAI, the latter of which has not gone public. Microsoft has integrated OpenAI’s technology with its Bing search engine.
Following the introduction of ChatGPT to the general public in late 2022, many stocks associated with AI began to rally. Nvidia for instance advanced well over 200% in the six months following the release. Immediately, pundits on Wall Street began to wonder whether the market was being consumed by another tech bubble. Famous investor Stanley Druckenmiller, who has held major investments in both Palantir and Nvidia, said that bubbles never last just six months. He said that if the excitement over AI did become a bubble, then the extreme valuations would last at least two and a half years or long like the DotCom bubble in the late 1990s. At the midpoint of 2023, the best guess is that the market is not in a bubble, at least for now. Yes, Nvidia traded at 27 times forward sales at that time, but analysts were predicting extremely high revenue growth for years to come. At the height of the DotCom bubble, the NASDAQ 100 traded for 60 times earnings, but in mid-2023 the index traded at 25 times earnings.
Palantir stock forecast
Before Tuesday’s new range high, Palantir stock was in a technical, short-term downtrend. This is because PLTR shares had been trending lower ever since hitting a range high at $21.85 on November 21 of last year.
The surge in the PLTR stock price will now give bulls hope for retesting the high-volume zone between $23 and $29 from the company’s first year of public trading, which lasted from 2020 to 2021.
Besides $21.85 offering support, the $20.24 high from August 1, 2023 might also be considered. The stock is trading well above its 20-day and 50-day Simple Moving Averages (SMAs), and it may trade with increased volatility until those SMAs close in on current price action.
PLTR daily stock chart
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