Does Palantir’s AI Push Now Drive Purchases?

Palantir Technologies Inc. (PLTR) builds and deploys software platforms for the intelligence community to help with counterterrorism investigations and operations. In the ultimate stated quarter, the corporation exceeded analyst sales and earnings expectations. PLTR said revenue of $678.Thirteen million, topping analysts’ estimate of $652.Forty two million, and its EPS of $0.09, which additionally exceeded analysts’ estimates.

Palantir caters to a huge range of clients, such as authorities and different business agencies. During the second quarter, its US authorities sales showed increase of 24% yr-over-12 months to $278 million, and its industrial sales grew 33% yr-over-year to $307 million. Also, the company finalized 27 offers well worth over $10 million, and its patron matter rose 41% 12 months-over-yr.

In the latest duration, PLTR entered into a couple of strategic partnerships with businesses, consisting of Microsoft (MSFT), BP (BP), and Tree Energy Solutions, to boost up their AI-integrated solutions and operations. Also, the agency has shrunk to provide facts integration and AI solutions to drive digital transformation for clients.

PLTR is a number of the enterprises that have benefitted exponentially from the Artificial Intelligence (AI) revolution. Last yr, it launched its Artificial Intelligence Platform (AIP), which has helped the business enterprise obtain quicker sales increase. Also, with the strong boom trajectory of the Artificial Intelligence market, poised to grow at a CAGR of 35.7% to reach $1.34 trillion by way of 2030, Palantir’s potentialities are promising.

However, increasing competition and the increasing number of companies involved in software development and innovation may affect PLTR’s market share and current market dominance.

Shares of PLTR have increased 41.3% over the past six months and 123.9% over the past year, ending the last trading session at $34.91.

Let’s take a look at the factors that could affect PLTR’s performance in the coming months

Good recent progress

On Sept. 10, 9, PLTR and BP expanded their strategic relationship by signing a collaboration agreement to deliver new artificial intelligence capabilities through Palantir AIP software The new agreement is built over a decade of has developed an in-depth application of industry-leading PLTR software to utilize BP oil and gas. has built a solid foundation for production.

Through the collaboration, Palantir’s AIP software will help BP use large-scale language models (LLMs) to improve and accelerate human decision-making through automated processes suggested by automated analysis of the underlying data on.

On August 8, PLTR and Microsoft Corporation announced a major step forward in their partnership to bring sophisticated and secure cloud, AI and analytics capabilities to the US. Defense and Intelligence Community.

This combination of leading-edge technologies enables national security mission-critical capabilities Microsoft’s best-in-class LLM through the Azure OpenAI (AOAI) service in PLTR’s AI platform in Microsoft government and classified cloud environments.

Strong financial strength

For the second quarter ended June 30, 2024, PLTR’s revenue increased 27.1% year-over-year to $678.13 million, while its gross profit increased 17.1% year-over-year to $549.57 million Company net income the change in operating margin was $253.57 million indicating an increase of 87.8% from the prior year price.

Additionally, the company’s adjusted net income of $221.41 million and $0.09 million, increased 85.2% and 80%, respectively, from EPS adjusted for common shareholders PLTR’s adjusted EBITDA increased 82.4% year-over-year to $261.62 million, . it did.

Additionally, the company’s adjusted free cash flow grew 54.8% from a year earlier to $148.66 million.

Positive analyst estimates

Analysts expect PLTR’s revenue for the quarter (ending September 2024) to grow 26.1% year over year to $703.69 million. The consensus EPS estimate of $0.09 for the same period indicates a growth rate of 29.8% year over year. Additionally, it has an impressive history of impressive earnings, having exceeded revenue consensus and EPS estimates in each of the four consecutive years

For the fiscal year ending December 2024, the company’s revenue and EPS are expected to grow 24% and 42% year-over-year to $2.76 billion and $0.36, respectively Furthermore, the Street expects that fiscal 2025 revenue a will be achieved and EPS will increase % and 21.4% to $3.32 billion and $0.43, respectively

Higher profitability

PLTR’s trailing-12-month gross profit margin of 81.39% is 64.2% above the industry average of 49.58%. Its trailing 12 months return of 16.32% is significantly higher than the industry average of 3.79%. Moreover, the stock’s trailing-12-month EBIT margin of 11.78% is 134.8% higher than the industry average of 5.02%.

Furthermore, the stock’s trailing-12-month ROCE, ROTC and ROTA are positive at 11.55%, 4.75% and 7.79% respectively as compared to the industry averages of 4.59%, 2.73% and 2.17% respectively

In-depth research

On a non-GAAP basis, PLTR is trading at 98.34x, which is 320.3% higher than the industry average of 23.39x. Similarly, the stock’s forward EV/Sales multiple of 27.01 is significantly higher than the industry average of 2.82. Furthermore, its 74.47x forward EV/EBITDA is 13.91x 435.2% higher than the industry average.

Moreover, the stock’s forward price/sales of 28.34x is significantly higher than the industry average of 2.77x. And its 17.60x price/book is 331.1% higher than the industry average of 4.08x.

POWR ratings reflect uncertainty

PLTR’s mixed prospects are reflected in its POWR Ratings. The stock has an overall rating of C, which translates to Neutral in our proprietary structure. POWR Ratings are calculated by considering 118 different factors, with each factor weighted to its optimal level.

Our proprietary rating system also calculates the value of each stock based on eight specific categories. PLTR has an A grade for quality, consistent with higher profitability than the industry.
However, the stock earned a D grade for stability with a consensus 24-month beta of 2.06.

PLTR ranks #17 in the 18-Stock A-Rated Software – SaaS Industry.

Other than the above, we also awarded PLTR for Sentiment, Growth and Momentum. You can find all PLTR Ratings here.

The bottom line is that
PLTR’s recent strategic restructuring and collaboration with industry leaders has strengthened its position in the AI ​​market. Since then, continued efforts to use AI for government and commercial contracts have contributed significantly to expanding productivity.

While the company’s long-term prospects look strong strategically and on a strong financial performance, its broad valuation and increasing market competitiveness suggest it may be worth the wait to get to a better place in this stock

Palantir Technologies Inc. Stocks to consider than if (PLTR)

Short-term pessimism undermines the chances of outperforming PLTR in the coming weeks and months. However, there are many industry peers with more impressive POWR Ratings. So, instead consider these A (Strong Buy) or B (Buy) stocks from the A-rated software – SaaS industry:

DocuSign Inc. (DOCU), MiX Telematics Ltd.; ADR (MIXT), and WM Company of Supplies, LLC (MAPS).

Click here to find more A and B rated software stocks.

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PLTR stock traded up $0.68 (+1.95%) during midday trading on Friday, trading at $35.59 per share. Year-to-date, PLTR has gained 107.28%, compared with an 18.99% rise in the benchmark S&P 500 index during the same period.