Palantir: Consider 3 Moves for Capitalizing on Market Momentum

Friday at 03:45 PM

As soon as trading started on Tuesday, Palantir Technologies Inc (NYSE:) stock price shot up, gaining nearly 20 percent within half a day. The excitement around PLTR was already sparked on Monday evening when CEO Alex Karp not only presented impressive quarterly figures but also made his usual bold statements about the company’s apparent bright future.

Palantir raised its profit expectations for the current fiscal year yet again – not a surprising move given the company’s double-digit percentage growth in revenue and net income in just the third quarter. After being added to the in late September, Palantir also has excellent news for its shareholders regarding the coming months.

“Palantir is for Winners!”

“We absolutely eviscerated this quarter,” Alex Karp proudly stated on Monday evening in the company’s report on the latest business results. He dismissed criticism of Palantir’s business model and surveillance technology, which is used by entities like the Israeli and Ukrainian military, leaving no doubt about his staunch US patriotism. Earlier in October, the tech tycoon declared to the media that he had “no problem if our enemies die,” referring to the United States’ geopolitical adversaries. Karp also expressed strong faith in American innovation. According to him, Palantir owes its exceptional quarterly results to a U.S.-driven AI revolution which is now fully underway.

Karp’s praises for the United States are unsurprising and quite savvy from a business perspective. The US government remains Palantir’s most important client: out of $726 million in revenue, $320 million came from federal contracts, an increase of 40 percent from the previous year. Karp’s enthusiasm for the leading role of North America in Artificial Intelligence seems sincere, as he believes the US lead will only widen: “The world will be divided between AI haves and have-nots. At Palantir, we plan to power the winners”.

A Strong Quarter for Palantir – And Grand Plans Ahead

What sparked such enthusiasm among Palantir’s investors, leading to a brief buying frenzy around PLTR on Tuesday? Unlike its peers, Microsoft (NASDAQ:) and Meta (NASDAQ:), whose stock prices fell despite strong earnings, Palantir not only posted excellent quarterly results on Monday but also offered optimistic forecasts for the near future. Between July and September, Palantir generated $726 million in revenue, a 30 percent increase compared to the third quarter of the previous year. The latest forecast for the fourth quarter projects revenues between $767 and $771 million. Previously, analysts expected around $741 million for the winter months.

Palantir exceeded expectations not only with its forecast for Q4 but also with the confirmed figures for Q3. Wall Street had expected $0.09 earnings per share, while Palantir delivered $0.10 – a 43 percent increase from the prior year’s quarter. Net income rose by 56 percent to $242 million, surpassing analyst estimates of approximately $222 million.

Despite rising income in both the public and private sectors, Palantir faces a minor setback as these two pillars drift further apart. Government business, historically Palantir’s strong segment, grew by a third to $408 million, while private sector revenue, up 27 percent to $317 million, lags slightly. A significant factor for this may be Palantir’s recent seven percent decline in international commercial revenue due to sluggish sales in Europe.

“Huge Demand for AI”: Inclusion in the S&P 500 Just the Beginning?

After reporting its first adjusted profit in the spring, Palantir now meets the criteria for inclusion in the S&P 500, with its listing finalized on September 23. The software company attributes this success primarily to a strong performance in the U.S. market, which Alex Karp openly admires: “It is the speed with which institutions in the United States, in particular, have adopted our platforms and artificial intelligence capabilities more broadly that has been, and we believe will continue to be, the driver of our growth,” he wrote in a letter to investors.

And indeed, Palantir’s growth engine seems to be humming strongly. For the current year, the company projects an adjusted operating income of about $1.05 billion, while analysts had previously expected around $980 million.

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