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Palantir (NASDAQ:PLTR) stock got a big boost over the weekend when Wedbush managing director Dan Ives initiated coverage with an “outperform” rating.
PLTR stock rose 10% on July 28 and another 6% over the weekend. It opened this morning at about $19 per share. PLTR’s market capitalization is now $40 billion, with an annual revenue of $1.9 billion.
How Much Success?
Ives calls artificial intelligence (boosting some of the highest-value stocks out there, including Microsoft (NASDAQ:MSFT) and Nvidia (NASDAQ:NVDA). While present valuations appear stretched on a historical basis, he insists they’re justified by the productivity gains AI software delivers.) “the fourth industrial revolution” and has been
Palantir offers a proprietary database service that quickly analyzes large amounts of data and offers actionable suggestions. Most of its initial success came from military contracts. But it has been moving into other areas of government and commercial accounts.
Because Palantir’s Software as a Service (SaaS) is providing simple results from large amounts of complex data, it has been caught up in the market’s AI boom. The stock is up nearly 200% this year, although the company projects growth of under 20% and is marginally profitable.
Despite its high valuation, Ives still insists it’s a buy. Palantir has built an “AI fortress” he believes is “unmatched,” and it’s all proprietary. He expects the stock to quickly jump 54%, and his comments started the rally. His latest price target is $25 per share.
Palantir is due to report earnings on Aug. 7. Analysts currently expect revenue of $2.21 billion in 2023 and $2.62 billion next year, a growth rate of 16-18%. The modest expected growth rate has the most leery of supporting Ives’ call. Only three of Tipranks’ 13 analysts are telling customers to buy it.
PLTR Stock: What Happens Next?
InvestorPlace’s Markets Analyst Thomas Yeung included PLTR on his list of “AI Stocks Poised for Growth Without Sky-High Risk.”
As of this writing, Dana Blankenhorn held LONG positions in MSFT and NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.