HomeMost Popular The Resilient Rise of Palantir Technologies Inc.

The Resilient Rise of Palantir Technologies Inc.

Actionable Trade Ideas

always free

Large group of 3D box shapes generate an abstract topology. Data visualization concept. Digitally generated 3D rendering

Palantir’s Strategic Evolution

In the face of constrained government spending and cautious commercial IT investment, Palantir Technologies Inc. (NYSE:PLTR) has exhibited remarkable resilience and strategic adaptability. The introduction of its Artificial Intelligence Platform (AIP) in 2023 heralds a transition from a service-oriented to a platform-centric business, particularly gaining ground in the commercial sector.

Recognized for its prowess in AI and data science by Dresner Advisory Services, the company is well-positioned to capitalize on the burgeoning AI market, projected to reach $739 billion by 2030. Palantir’s enterprising approach and expanding commercial focus augur an auspicious future in tech-driven business solutions.

With a recent stock pullback of 12.53%, closing in on our identified entry range of $12.55-$14.95, long-term investors have an enticing opportunity to leverage Palantir’s sturdy fundamentals and growth potential in the buoyant AI market.

Anchoring amidst Economic Shifts

Palantir’s revenue growth has hovered below 20.0% YoY over the past four quarters, partly due to macroeconomic headwinds. Both the government and commercial segments felt the pinch, as US federal budget cuts and global business reticence in non-essential IT spending, prompted by inflationary pressures, took their toll.

The government segment, driving 56.0% of Palantir’s total revenue, bore the brunt amidst a noticeable geographic concentration, with the USA contributing 76.2% of its government segment revenue. An 8.6% year-over-year negative growth in Q3’22 was swiftly replaced by a robust 12.8% YoY growth in Q3’23, signifying a revival in government spending.

The recent quarterly performance of PLTR paints a picture of resurgence in growth and, concurrently, hints at the gradual subsiding of longstanding macroeconomic headwinds.

Foray into Increasingly Diverse Markets

The company’s strategic collaboration with Google Cloud for public cloud services and channel partnerships with IBM and Fujitsu is poised to streamline deployment processes, fostering broader market penetration.

Moreover, the launch of AIP by PLTR is set to significantly bolster the commercial segments, enabling customers to interact with product ontology more intuitively and expediting software deployment for specific use cases. Notably, major contract wins, including those with the UK’s National Health Service and the US Army, are expected to fuel growth in the government segment.

PLTR’s recovery in remaining performance obligation (RPO) also suggests improving revenue growth in the coming quarters. Likewise, the company’s net dollar retention remains above 100.0%, indicating that the PLTR platform’s stickiness has remained intact.

Leading with Unyielding Client Portfolio and Cloud Expansion

Palantir’s average revenue per customer (ARPC) remains notably higher than its peers. The top 20 high-value customers drive a substantial portion of PLTR’s revenue, yet their contribution has been gradually waning, underlining the company’s endeavor to cater to a broad and diverse market.

Specifically, the top 20 customers’ revenue contribution fell to 50.8% based on TTM as of September 2023, down from 57.1% in FY21. Consequently, the average revenue per customer of PLTR dropped below USD $5 million based on the latest TTM revenue, compared to USD $6.5 million in FY21.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.