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Wondering if it’s smart to buy a stock after a sudden surge? Sometimes, taking the plunge into a market leader like cyber-defense and artificial intelligence technology specialist, Palantir Technologies (NYSE: PLTR), seems like a good move. Our PLTR stock outlook for the long term is positive. However, too many investors are diving in without a clear strategy.
When a stock takes a nosedive, skeptics may claim it’s “cheap for a reason.” In contrast, we grade Palantir stock a “B” and label it “richly valued for multiple reasons.” The short sellers have underestimated Palantir Technologies, but buyers need to comprehend why they are invested.
PLTR Stock Jumps After ‘Bombastic, Baller’ Results
Over the past year, Palantir Technologies effectively pivoted from cybersecurity to AI technology. The shift is evident as the company declared itself “a leading provider of AI systems to the energy sector” and is showcasing this through deploying AI software to support Bahrain’s energy sector.
Palantir Technologies’ success in transitioning to an AI-tech focus explains the dramatic 30% surge in PLTR stock on Feb. 6. At the release of its fourth-quarter and full-year 2023 results, Chief Revenue Officer Ryan Taylor enthusiastically proclaimed, “I’ve never seen the level of customer enthusiasm and demand that we are currently witnessing from AI platforms in U.S. commercial.”
Taylor’s enthusiasm is well-founded. Palantir Technologies celebrated its “first profitable year” (2023) and five consecutive quarters of GAAP-measured profitability. The company’s fourth-quarter 2023 U.S. commercial revenue soared 70% year over year to $131 million.
Perhaps Palantir Technologies CEO Alex Karp earned the right to use unorthodox adjectives. Specifically, Karp described Palantir’s Q4 2023 commercial business as “bombastic, baller, incomprehensibly good.”
Palantir Technologies Aims High in 2024
Looking forward, Palantir Technologies projects current-year adjusted income from operations in a range of $834 million to $850 million. Wall Street’s forecast was a modest $760.3 million.
Unsurprisingly, Karp remains supremely confident. “Our commercial business is exploding in a way we don’t know how to handle… We don’t know what to do with the onslaught of demand,” the CEO recently expressed in an interview.
At this point, it might be unwise for investors to share Karp’s level of “bombastic, baller” self-confidence. Palantir Technologies must now live up to the hype in the coming quarters. That’s easier said than done after a single-day, 30%+ share-price rally.
The message here isn’t that you should sit on the sidelines. Rather, it’s that Palantir Technologies is a well-positioned AI business to consider investing in, but not without due consideration.
Palantir Stock Outlook: Have a Plan
Our PLTR stock outlook predicts higher prices in the future, but the near term is unpredictable. Karp has generated significant enthusiasm for Palantir Technologies, and the company is now richly valued.
It’s wise to start small and steady if you’re building a position in Palantir stock now. Beginning with a few shares and planning to add more if the price dips 10%, 20%, or 30% is a prudent strategy for approaching Palantir Technologies investment with an overall bullish outlook and due consideration in the near term.
On the date of publication, Louis Navellier held a long position in PLTR. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
