Since the AI trend has picked up in recent years, Palantir Technologies (NYSE:PLTR) stock has emerged as a top high-growth play investors are increasingly looking at.
With decades of experience in working on secretive government projects, Palantir has continued to grow its footprint in the commercial applications market.
Impressively, the company’s commercial client count surged 69% year-over-year in Q1, with revenue surging 40%. This growth helped the company achieve six consecutive quarters of GAAP profitability.
Palantir’s AI Platform and educational initiatives has boosted client engagement, with notable partnerships like Starlab Space for AI-driven data modeling and Voyager Space for defense and commercial tools.
Priced at $28 per share, PLTR stock has surged 69% year-to-date, recently reaching a 52-week high. Let’s dive into what to expect when the company reports its Q2 results on August 5.
So Far So Good
In early 2024, generative AI boosted many tech stocks, with the semiconductor sector certainly getting most of the love. Unfortunately, many software companies struggled. But Palantir, seen as an AI pioneer, stood out.
Originally launched a big data platform for the U.S. government, Palantir has gained strong commercial adoption amid the AI surge.
In Q4 2023, Palantir posted 19.6% revenue growth, surpassing estimates and achieving profitability, making it unique among newly public software companies.
Palantir’s commercial adoption fueled bullishness among growth investors, and for good reason. The company’s Q4 commercial revenue surged 32%, comprising 47% of total revenue.
Meanwhile, government revenue grew only 11%. U.S. commercial revenue surged 70%, with a 55% increase in U.S. commercial customers. Despite enthusiasm, Palantir’s stock ended Q4 flat due to valuation concerns.
Wedbush is Bullish on PLTR Stock
Palantir had an excellent month with a 15% gain, despite minimal weekly increases. At the time of writing, PLTR stock is making a nice move, up 3.5% today.
Wedbush analyst Dan Ives, a longtime tech analyst, predicts a number of top megacap tech stocks will report strong Q2 earnings. Palantir, not among the Magnificent Seven, also shows impressive potential, at least in Ives’ view.
The analyst predicted Q2 earnings would boost tech stocks by 15% in 2024, driven by software, cybersecurity, digital ads, and semiconductors.
Various AI developments, especially in cloud and enterprise AI spending, are surpassing expectations, positioning PLTR stock for growth as Q2 earnings spark new investor interest.
Despite strong recent quarters, PLTR stock remains under $30 per share. Thus, this stock appeals to many retail investors seeking AI market exposure.
Palantir excels in data analytics, cybersecurity, energy, and defense, securing lucrative government contracts. Flagged by Ives as a Q2 winner, the stock is expected to rise, making it a smartwatch for savvy investors.
Palantir Looks Fairly Valued
Investors who bought Palantir in 2022 have seen impressive gains of 335% over the past 18 months. The surge was due to accelerating revenue growth and profits.
The government sector secured new contracts, while U.S. commercial growth compensated for slower international expansion. The introduction of new AI tools also supported growth.
Palantir’s U.S. commercial business rapidly grew, with revenues rising 40% year-over-year to $149.7 million in Q1 and a 69% increase in customers to 262.
The U.S. government sector also reaccelerated, posting 8% revenue growth. Palantir secured a $178.4 million contract with the U.S. Army under the TITAN program, positioning itself as a “software prime” for future defense opportunities.
It’s likely that these catalysts are currently priced in, and investors will need to see more good news in order for PLTR stock to move higher from here. But if recent quarters are used as a benchmark, that’s certainly possible.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.