Palantir Technologies: The Rising Star in AI and Data Analytics

Meet the New S&P 500 Stock That's Soared 100% This Year

Inclusion in the benchmark index is a big milestone for this 20-year-old company. Today, Sept. 23, the S&P 500 index is welcoming a new stock that's been flying high this year. This particular technology company has seen its shares rise more than 100%, and considering the company's earnings performance so far and future prospects, it may have more room to run. You probably won't be surprised when I say this company is a player in the area of artificial intelligence (AI), one of the highest-growth markets today. AI, expected to become a $1 trillion market by the end of the decade, is fueling revenue growth at a wide variety of tech companies, from those offering AI to help companies become more efficient to those selling components or services for AI platforms. The new S&P company helps its clients use AI to save time and money, and therefore become more profitable over time and reach their goals. Let's find out more about this exciting growth stock. A company powering the U.S. economy As of the opening bell today, Palantir Technologies (PLTR 1.00%) will be part of the S&P 500. This is a big milestone, because it signals the company is one of those powering the U.S. economy. Investors recognize this, so some that before this moment may have hesitated to buy Palantir shares now could view the company with more confidence. The stock may also get a short-term boost as managers of funds tracking the S&P 500 buy it so that their funds can correctly replicate the performance of the benchmark. Palantir has been appealing to investors -- and in turn, makes a great addition to the S&P 500 -- thanks to its track record of growth, a new wave of growth that's just beginning, and its long-term prospects. First, a look at the path so far. Palantir isn't a new kid on the block. The company has been around for about 20 years, and for most of that time it was associated with government contracts. Palantir helps customers aggregate their data and use it to become more efficient and even to make game-changing decisions. This has helped earnings progress over time. But the company's growth really took off in recent times thanks to its focus on using artificial intelligence to fuel its work. Last year marked a big step forward for Palantir as the company launched its Artificial Intelligence Platform (AIP). This AI-driven system allows customers to rapidly harness the power of their data and go from zero to a significant use case in a matter of hours. A booming commercial business And so potential customers may see the power of AIP, Palantir holds bootcamps. These sessions fill up quickly and have helped drive tremendous growth for Palantir. And all of this has helped the company's commercial business to explode. In fact, U.S. commercial growth now is surpassing that of revenue growth from government contracts. In the most recent quarter, U.S. commercial revenue jumped 55%, while U.S. government revenue added 24%. And U.S. commercial customer count soared more than 80%, with remaining deal value advancing more than 100%. And considering the company now has just under 300 U.S. commercial customers, there's still plenty of room for growth. Gains so far along with the company's observations of "unrelenting" demand are reason to be optimistic about this. On top of this, AIP still is relatively new, so we could imagine many more companies and organizations jumping on board in the coming months and years. All of this should translate into higher earnings down the road. And this is why, even considering the stock's gain so far this year, there's reason to be confident about growth potential. Palantir probably won't climb nonstop. Stocks generally don't. But I wouldn't be worried if the shares take a pause or dip at a certain point. Over the long term, Palantir has what it takes to deliver a win for investors who buy and hold, making it an excellent stock to buy now.

4 Things Palantir Investors May Have Missed This Week | The Motley Fool

The artificial intelligence (AI) specialist got a metric ton of positive news this week. The latest advances in artificial intelligence (AI) have created a lot of buzz since early last year. These next-generation algorithms' ability to create original content, streamline processes, and increase productivity has businesses far and wide racing to capture their share of the resulting windfall. One company uniquely positioned to profit from these secular tailwinds is Palantir Technologies (PLTR 1.00%). Its decades of experience developing AI helped the company pivot to embrace the demand for generative AI, and that move has been a boon to Palantir and its shareholders. Indeed, the stock has soared 477% since the start of 2023, fueled by improving results and the company's expanding opportunity. Over the past week, the good news has come fast and furious for Palantir. With so much happening, investors may not have caught all the recent developments. Here are four things Palantir investors may have missed this week. To kick off the week, Palantir announced an expansion of its pioneering partnership with Nebraska Medicine to advance healthcare using AI, resulting in a new multiyear, multimillion-dollar contract. Nebraska Medicine is an early adopter of Palantir's Artificial Intelligence Program (AIP) and has "implemented more than ten applications of AIP, improving patient throughput, expanding claims reimbursements, and better monitoring patient care." It noted that AIP helped the health system to develop a new workflow in less than six weeks, with additional breakthroughs in as little as 90 minutes. One example is the improvements to Nebraska Medicine's Discharge Lounge, which has experienced a 2,000%+ increase in utilization. This reduced the time necessary to discharge patients by one hour, on average, freeing up bed space for other patients. Analysts at Bank of America (BofA) Securities added Palantir to the firm's US 1 list. To be included in the list, a stock must be listed in the U.S., have a buy rating, and be covered by the investment bank's equity research analysts. The stock must also have an average daily trading volume of $5 million during the preceding six months. The list is meant to represent BofA's best investment ideas. The analysts cited Palantir's groundbreaking Warp-Speed platform, which was designed to integrate various aspects of manufacturing systems. It combines elements of enterprise resource planning (ERP), manufacturing execution systems (MES), product lifecycle management (PLM), programmable logic controllers (PLCs) for factory automation, and even input from workers on the factory floor. The analysts described it as "a tool that could transform the American industrial base," leading to its inclusion in the list. Palantir announced that it had been awarded a contract by the DEVCOM Army Research Laboratory to expand its Maven Smart System across all branches of the military service, including the Army, Air Force, Space Force, Navy, and U.S. Marine Corps. Maven is an AI-based targeting tool that is part of the National Geospatial-Intelligence Agency's Maven AI framework. Palantir said it acts as the "connective tissue" between troops on the ground, battlefield sensors, hardware, and software. The fixed-price contract could be worth as much as $99.8 million over the next five years and will improve the military services' AI and machine learning capabilities. Finally, Friday marked the last trading day before Palantir joined the S&P 500. The S&P is the most widely recognized benchmark in the country, made up of the 500 largest companies in the U.S. As such, it's also viewed as the best gauge of overall stock market performance. Palantir will be added to the prestigious index when the market opens on Monday and is one of only 11 companies to join its ranks so far this year. There is a strict set of criteria required to be added to the S&P 500, and Palantir has passed with flying colors. While this might seem trivial, Bank of America analyst Mariana Pérez Mora calls it a "watershed moment." The analyst believes there's a "fundamental misunderstanding" concerning Palantir, and its addition to the widely followed index will force institutional investors to revisit what they think they know about the AI pioneer. A better grasp of what Palantir does and the fundamental opportunity ahead could help dispel those misunderstandings, increasing demand and driving the stock price even higher. That's why the analyst maintains a buy rating and Street-high $50 price target on Palantir stock, which represents a potential upside of 34% -- despite already notching gains of 477% since early last year. Given the business trajectory, the vast opportunity, and management's consistent execution, I believe that price target will end up being conservative.

Is Palantir a Good Artificial Intelligence (AI) Stock to Buy Now? | The Motley Fool

This software company is joining the S&P 500 index, a testament to its impressive growth. After rising by more than 100% in 2024, Palantir Technologies (PLTR 1.00%) is finally getting Wall Street's attention. The data analytics company has benefited from a surge in excitement around its new generative artificial intelligence (AI) tools. And it will join the benchmark S&P 500 index this month, demonstrating its growing relevance in the market. Let's dig deeper to see if it's a good idea for new investors to bet on this booming stock right now. Since the launch of OpenAI's ChatGPT in late 2022, generative AI-related stocks have generated billions, if not trillions, in shareholder value. However, so far, most of the operational momentum has been limited to hardware giants like Nvidia, which saw its second-quarter revenue more than double by selling the graphics processing units (GPUs) needed to run and train these advanced algorithms. While the software side of the AI industry has enjoyed relatively less success, Palantir could help change this dynamic by introducing the technology to discerning military clients and intelligence agencies that need to stay one step ahead of their adversaries. The company has created its Artificial Intelligence Platform (AIP) designed to synergize its legacy data mining tools with AI large language models (LLMs) to provide real-time insights in high-stakes combat scenarios for the U.S. and its allies. Palantir also courts private sector businesses through its data analytics platform Foundry (its government-focused platform is called Gotham). Palantir's soaring stock price corresponds with healthy business momentum. In the second quarter, total revenue grew 27% year over year to $678 million. However, while the company is best known for its high-profile government contracts, private sector work is becoming an increasingly core part of its business model. Palantir's second-quarter private sector customer count soared 83% to $295 million, and segment revenue increased by 55% to $159 million (around 23% of total sales). While this remains a relatively small part of Palantir's business, its growth will be welcome news for investors. Unlike government contracts, which can be blocky and inconsistent, commercial software-as-a-service (SaaS) revenue is designed to be stable and reccurring. This characteristic will make Palantir easier to predict and value. It also provides welcome diversification and suggests the company is good enough to compete in a very crowded field. Palantir's bottom line also remains buoyant, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rising 39% to $261.6 million. However, this metric adds back a whopping $141.8 million in stock-based compensation. Paying employees with stock can help young companies motivate their staff and save cash reserves, but that comes at the cost of diluting current shareholders' claims on future earnings. So investors should weigh the trade-offs. Excessive stock-based compensation is not Palantir's only problem. As mentioned earlier, the company's push into private sector SaaS deals puts it in a crowded industry where it will compete with other data analytics software giants like Amazon and Microsoft. While Palantir has an economic moat in government contracts because of its long relationships and resistance to outside pressure, it is unclear how well these advantages will translate to its private sector work. Palantir's megacap rivals likely have more cash to spend on research and development (R&D) and customer acquisition. And they boast stakes in leading AI companies like OpenAI (a Microsoft partner) and Anthropic (an Amazon partner). Considering these challenges, Palantir's forward price-to-earnings (P/E) multiple of 88 looks far too optimistic. And I don't see the company growing into this rich valuation any time soon.

One Wall Street Analyst Just Added Palantir to Its Top Investment List and Says It Could Climb 35%. Time to Buy? | The Motley Fool

Right now is an exciting moment for Palantir Technologies (PLTR 1.00%). It's set to join the S&P 500 index on Monday, showing that the company is one of today's leaders. The stock has soared more than 100% so far this year, even climbing in recent weeks when other tech stocks have stumbled. And Palantir is starting to see big results from the launch of its Artificial Intelligence Platform (AIP) last year. On top of this, Bank of America recently added Palantir to its list of top investments and predicts the shares could rise 35% from their current level. The bank selected the stock for its U.S. 1 List and expressed optimism about its addition to the S&P 500 and long-term prospects. The list represents the bank's favorites among its buy-rated stocks. Is it time to follow Bank of America's advice and buy Palantir shares? Let's find out. First, a look at Palantir's path so far. For many years, the company was associated with government contracts, and these were its biggest growth driver. But in recent times, its U.S. commercial business has emerged as having great potential for Palantir. It has seen these customers increase from just 14 four years ago to nearly 300 today. And those customers span a wide range of industries. Palantir recently extended its agreement with oil company BP to "improve and accelerate human decision-making" and signed a new deal with fast-food chain Wendy's that will first focus on decision-making and then include supply chain management and waste prevention. In the most recent quarter, U.S. commercial revenue soared 55% and commercial-customer count increased 83%, showing strong momentum here. On top of this, the company posted $134 million in net income in the quarter, its highest quarterly profit ever. Now, let's consider what's ahead. The growth we've seen in the commercial business along with the fact that it is driven by Palantir's AIP is reason to be optimistic. Artificial intelligence is one of today's highest-growth fields, with companies hoping to use the technology to become more efficient and profitable. AIP is showing these customers and potential customers (through company "boot camps" that allow them to test the platform) how they can do this, and then AIP delivers on those promises -- so we could imagine demand for AIP continuing. CEO Alex Karp emphasizes this idea, saying that demand for AIP "shows no sign of relenting" and that the platform "has already transformed our business." The general AI market is expected to climb from $200 billion today to $1 trillion later this decade, suggesting that AIP, which is helping customers reach their AI goals, could continue to drive growth at Palantir. But just because the company's commercial business is soaring doesn't mean it has neglected the customers that once were its bread and butter. Its government business continues to excel -- in fact, in this recent quarter, for the first time ever, trailing-12-month revenue for the U.S. government business surpassed $1 billion. Now, let's return to our question. Is it time to follow Bank of America's recommendation and buy Palantir stock? Not all analysts are as bullish on it. Actually, the average analyst estimate expects Palantir shares to fall 27% within the coming 12 months. And the stock isn't the cheapest around. It actually looks pretty expensive, trading at more than 100 times forward earnings estimates. So, if you're looking for bargain-priced stocks, Palantir isn't right for you. That said, growth companies are often known to trade at steep valuations during certain moments of their story. So if you're investing in a quality company with plenty of growth ahead, you still can score a win if you buy today and hold on for the long term -- even if the shares are pricey today. Palantir has shown that it has what it takes to keep earnings climbing, and the fact that it operates in the high-growth area of AI is another plus. And all of this means Palantir makes a great investment today for growth investors who have the patience to invest now and stick with this exciting story as many chapters unfold.