Palantir Technologies: Rising Star in AI with Strong Financial Gains

Palantir Technologies (NYSE: PLTR) stands out as one of the top performers in the artificial intelligence (AI) sector this year. The company has achieved double-digit revenue increases, recorded its highest quarterly profit to date, and experienced a remarkable surge in its share price, which has more than tripled. Palantir specializes in helping clients organize and optimize their data, leading to improved efficiency, reduced costs, and the potential for new product development.

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Palantir’s Growth Story: From Government to Commercial Success

To understand Palantir’s current success, it’s helpful to look back at its history. For many years, the company was predominantly known for its government contracts. While these contracts continue to contribute to its revenue growth, commercial clients are now emerging as a significant source of new revenue. This shift has been crucial in Palantir’s recent financial performance.

Companies like Wendy’s and United Airlines have turned to Palantir for its data capabilities. Wendy’s is leveraging the platform to enhance decision-making processes, which should eventually improve supply chain operations and minimize waste. United Airlines has implemented a predictive maintenance system, which has reportedly saved the company millions of dollars.

According to its latest earnings report, Palantir’s U.S. commercial revenue increased by 55%, while government sales rose by 23%. Furthermore, the number of commercial customers has dramatically expanded; Palantir had just 14 U.S. commercial clients four years ago, but this number is now approaching 300.

A substantial contributor to this customer growth appears to be Palantir’s Artificial Intelligence Platform (AIP). This system merges AI technology with client data, and interested companies can explore its potential benefits through AIP “boot camps,” where they can go from understanding the basics to creating practical applications in just a few hours.

These boot camps have generated strong interest, often leading to contracts shortly after completion. For instance, a wholesale insurance broker signed a seven-figure contract with Palantir a mere two weeks following their participation in a boot camp.

Anticipating the Upcoming Earnings Report

As we approach the next earnings report on Nov. 4, there are reasons for optimism. The AIP, which debuted last year, is still gaining traction, and the company consistently reports that demand for its services remains robust. This aligns with the broader AI market, currently valued at $200 billion, which is anticipated to grow to $1 trillion by 2030. Many companies are eager to harness AI’s potential, allowing Palantir to capitalize on this trend.

In the previous quarter, Palantir raised its full-year revenue outlook, projecting growth of at least 23% for total revenue and 47% for U.S. commercial revenue compared to the previous year. Additionally, the company expects at least a 52% increase in adjusted income from operations.

With such promising indicators, one might be tempted to rush into buying Palantir stock ahead of the earnings report. However, investing should focus on long-term gains, ideally holding onto quality stocks for a minimum of five years. By adopting this strategy, short-term fluctuations after the earnings report will have a lesser impact on long-term returns.

This approach alleviates the pressure to make quick decisions regarding stock purchases. Overall, Palantir remains an intriguing investment opportunity, both before and after Nov. 4, due to its consistent growth and potential for future earnings increase.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.