Sunday, February 25, 2024
Stock Market

Why Palantir (PLTR) Stock Is Chugging Higher Ahead of Earnings

Palantir is rising ahead of earnings, and if it beats estimates handily the stock could fly

Source: Poetra.RH /

Shares of Palantir (NASDAQ:PLTR) stock are rising ahead of earnings due out after the market closes today.

The database software company is expected to report operating earnings of $187 million, 8 cents per share, on revenue of $603 million.

Shares that traded as low as $16.05 on Feb. 1 were selling this morning for $17.65, a gain of about 10%. The company’s market capitalization is now nearly $36 billion.

Analysts vs. Traders

Palantir called itself a database software company when it came public in 2020, But it now bills itself as an artificial intelligence (AI) applications developer.

What has traders most excited is the source of Palantir’s current growth. Over half the company’s revenue still comes from government customers, but commercial accounts are expected to show growth of 26%. CEO Alex Karp expects commercial revenue of $1 billion in 2025.

But not everyone is bullish on Palantir, especially professional analysts. Investment firm William Blair says its growth will lag that of Snowflake (NASDAQ:SNOW) and privately-held Databricks. Jefferies downgraded the stock recently, calling its AI applications “overhyped.”

Most professional analysts agree with Blair and Jefferies. The stock is rated as a sell on Tipranks, with eight of 12 analysts telling customers to avoid it.

Traders at Stocktwits, on the other hand, are very bullish on the stock. Some are predicting a post-earnings gain of 20-30% if it beats estimates. InvestorPlace Contributor Will Ashworth is in the bullish camp, writing that “it’s making money and growing revenue.” What more do you want, he asks.

Palantir has a proprietary database engine built for military applications. Its Foundry is designed to combine customers’ data with proprietary language models. It has commercial applications in retailing, hospitals, and transaction processing.

During the fourth quarter, Karp emphasized the company’s foreign policy concerns by saying it will hold its next board meeting in Tel Aviv. This was done deliberately to emphasize its support for Israel after the Oct. 7 attacks.

PLTR Stock: What Happens Next?

It’s the speed of revenue growth and profitability that drives AI investment. Yet Palantir has lagged the market. Change that, and you change the narrative.

As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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