To The Moon

We have seen $Palantir Technologies Inc.(PLTR)$ continue its run during the AI rally, the concerns of overvaluation is still there, but I think we need to really look at how Palantir overall business have been performing.

I have a position on Palantir which I have hold because of the experience I have with their platform, so as we can see that Palantir have really grow since it experienced some stock price volatility over the past one year.

Palantir 280% YTD Return Not To Be Ignored

Palantir have given investors more than 280% returns year-to-date, the most significant increase came in November after its third quarter earnings, where Palantir reported a 30% year-over-year revenue growth in Q3, exceeding prior guidance. The US business saw a significant 44% year-over-year revenue growth, driven by increased AI demand.

This gives investors who are looking for top AI stocks to buy, get into PLTR as this ongoing rally continues to pick up steam.

Palantir Strong Growth Contributed By Rapid Adoption of AIP

We might have remember that this is a company that failed to produce a profit for many, many years. So as investors, how we evaluate whether a company is of high quality and with consistency, I guess Palantir ability to consistently boost margins and see growth might be part of the reason why we saw a surge in its stock price in November.

But we must not forget the most important driver of Palantir’s recent strong growth has been rapid adoption of its AI Platform (AIP) by commercial customers. The AIP has led to a 47% increase in U.S. commercial revenue to more than $672 million in 2024.

Palantir internal expectations from its management team have also note that the company’s AI infrastructure sales have more than tripled to $600 billion from $200 billion in 2023. This impressive total addressable market is something we as investors should take note.

In the third quarter, Palantir closed 104 deals over $1 million and customer count grew 39% year-over-year and 6% quarter-over-quarter, this trend show that Palantir is in the right direction to increase as much market share in the AI software AI platform space.

Palantir Partnership Grow Is Equally Important

Mega-Cap AI Project - Microsoft

On 08 August, Palantir and Microsoft expanded their existing partnership to integrate Palantir’s AI Platform with Microsoft’s Azure Cloud and OpenAI services for the U.S. Defense and Intelligence Community. This collaboration is aimed at deploying advanced AI and analytics across secure government cloud platforms, enhancing both companies’ capabilities in logistics, contracting, and more.

This partnership highlight the significant demand that AIP has with mega-cap client like $Microsoft(MSFT)$, Microsoft is betting big on AI with its Copilot project , so the increase in Copilot usage over time would see Palantir’s AIP having greater growth.

Palantir Continued Expansion In Oil And Gas Sector

On 25 Sep 2024, Palantir and $apache(APA)$, a leading oil and gas company, announced a multi-year, multi-million-dollar extension to their enterprise agreement originally signed in 2021. The agreement builds on the work deployed across APA’s global portfolio over the past three years and introduces new artificial intelligence capabilities with Palantir’s Artificial Intelligence Platform (AIP) software.

This is one of the strategy from Palantir to go into the oil and gas sector, as there will be much growth in this sector in 2025, oil and gas companies are expected to increase investments by over 60% in 2025. Companies may focus on consolidation to expand their asset bases, while also investing in the energy transition. 

Use Of AI In Defense Contractor Sector

On 23 October 2024, $L3Harris Technologies, Inc.(LHX)$ and Palantir announced a strategic partnership to propel advanced technology development and accelerate L3Harris’ digital transformation.

Together with L3Harris’s complementary capabilities which include its sensors and software-defined systems and Palantir’s Artificial Intelligence Platform (AIP), they will work together enable new levels of capability and resilient connectivity across the joint-all-domain network, ensuring warfighters can make more informed decisions faster to protect our nation’s security and that of our allies.

As you can see that Palantir is expanding its U.S. government defense business to independent defense contractor, with the proven record already in defense system capabilities, I believe we might see more and more defense contractor onboarding AIP.

Expanding AIP To Allow Integrate With Other Technology

The most recent partnership where Anthropic and Palantir on 07 November announced a partnership with Amazon Web Services (AWS) to provide U.S. intelligence and defense agencies access to the Claude 3 and 3.5 family of models on AWS. This partnership allows for an integrated suite of technology to operationalize the use of Claude within Palantir’s AI Platform (AIP) while leveraging the security, agility, flexibility, and sustainability benefits provided by AWS. The partnership facilitates the responsible application of AI, enabling the use of Claude within Palantir’s products to support government operations such as processing vast amounts of complex data rapidly, elevating data driven insights, identifying patterns and trends more effectively, streamlining document review and preparation, and helping U.S. officials to make more informed decisions in time-sensitive situations while preserving their decision-making authorities. Claude became accessible within Palantir AIP on AWS earlier this month (November)

I see this partnership as something that is important in today’s AI development as there is already open-source models but the integration on good and stable platform have always been a challenge so with the help of AWS which is known for their security, agility, flexibility, and sustainability, this would make AIP more appealing to companies who would want to bring their models, not restricted on to the defense industries.

Look Beyond Price/sales ratio of 29-times

Following $NVIDIA Corp(NVDA)$, Palantir did saw a slight dip as many AI stocks was dragged together, but we have seen that Palantir’s strong growth with its AI-driven models, and its traction seen among commercial customers, its partnership in recent months have given investors something to think of when they look at ways to play the long-term growth of AI technology.

As a big data company which was once focused mostly on government contracts (very stable revenue streams, but low margins), Palantir’s shift into the commercial realm has clearly paid dividends. And the company’s AIP launch has worked wonders for expanding its margins, and continuing the profitability story moving forward.

Palantir is among the most expensive stocks in the market, and most value investors will immediately rule out any company with a price/sales ratio of 29-times. But if we looked at how its AIP platform have been growing and maturing.

If the company does see accelerating growth on the top and bottom lines moving forward, this is certainly a company that may be a big winner from the next leg higher in the AI revolution.

Summary

If we looked at Palantir now, there is some resemblance of Nvidia, but we will not be able to know if Palantir will be the next Nvidia in terms of seeing the kind of rapid revenue and earnings growth acceleration in the coming quarters, but many in the market are clearly pricing in such a possibility.

But I continued to have faith in its AIP and I believe there will much more improvement or even new enhancement, given that their CEO have been with the company for a long time and have been innovative.

So if you as an investors do believe in Palantir, appreciate if you could share your thoughts in the comment section whether you think Palantir would continue to make new highs.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.