Shares in Palantir Technologies (Belter) on Tuesday as analysts debated whether the upside from generative AI deployments has begun for the data analytics software maker. Bulls in PLTR stock are touting full-year 2024 revenue guidance that came in higher than views amid strong growth in the commercial market.
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Palantir on Monday reported fourth-quarter earnings that met estimates while revenue beat Wall Street targets. Wedbush analyst Daniel Ives holds a buy rating on Palantir shares.
“With US business growing 70% in the fourth quarter and the number of commercial clients up 44%, the AI revolution is pushing AIP deal flow to a level we don’t expect until 2025,” he said in a report.
Furthermore, Palantir launched its own “AI platform” in early 2023.
For the quarter ended Dec. 31, Palantir's earnings using generally accepted accounting principles, or GAAP, were 8 cents per share, up 100% from a year earlier. The data analysis software maker said revenue rose 20% to $608 million.
Analysts had expected earnings of 8 cents per share on revenue of $603 million. Denver-based Palantir said government revenue rose 11% to $324 million, below sales estimates of $333 million. Commercial revenue rose 32% to $284 million, beating estimates of $271 million.
Palantir Stock: Guidance Pulse for 2024
Palantir's growth in the government market has slowed. The company aims to make up for this with new clients in the commercial market, such as healthcare. It also upgrades products using generative AI tools.
For all of 2024, Palantir said it expects revenue between $2.652 billion to $2.668 billion. Analysts expected sales of $2.64 billion, or growth of 19%. The company expects commercial revenue growth of 40% in the United States, well above estimates.
Jefferies analyst Brent Thiel on Tuesday upgraded PLTR shares to Hold from Underperform.
“Palantir had an impressive performance in the fourth quarter, led by business backlog and accelerating U.S. commercial growth,” Thiel said in a report. “The highlight was the delivery of free cash flow guidance, which was 34% above estimates. We are impressed with AIP accelerating faster than our initial expectations and believe it is appropriate to upgrade shares to reflect momentum.”
At RBC Capital, analyst Rishi Jaluria maintains an Underperform rating.
“On the one hand, US business growth and profitability results/guidance exceeded consensus,” he said in a report. “On the other hand, overall Q4 revenue upside was limited (government failed to reach consensus) and 2024 revenue guidance looks unwise to us.”
PLTR Stock: AI Opportunity
In a letter to shareholders, CEO Alex Karp said: “For 2024, as a result of our sustained and growing profitability, we now see a path toward $800 million to $1 billion of adjusted free cash flow.”
“We are committed to building a business that can survive and thrive in any type of macroeconomic environment,” he added. “As of the end of 2023, we held $3.7 billion in cash, cash equivalents and U.S. treasuries, representing an increase of $1.1 billion from the prior year.”
On the stock market today, PLTR stock jumped 17% to 19.56 in early trading. As Palantir's earnings report approaches, Palantir stock is down 2% in 2024.
Palantir stock rose 167% in 2023 amid hype around its generative AI technology.
Meanwhile, Palantir has used predictive AI with government clients for intelligence gathering, counterterrorism, and military purposes. It is now targeting generative AI applications in healthcare, energy and manufacturing.
But Palantir did not disclose prices for its AI products. In addition, pessimistic analysts say Palantir needs to show more progress in developing new revenue streams from generative AI.
Follow Reinhart Krauss on X, formerly known as Twitter, @reinhardtk_tech For updates on artificial intelligence, cybersecurity, and cloud computing.
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