Palantir Technologies, a leading software company, experienced a significant surge in its stock value on Tuesday. The impressive success of the company in securing commercial deals for its analytics software has overshadowed concerns regarding its future government contracts.
In premarket trading, Palantir shares rose by 18% to reach $19.80 following fourth-quarter earnings that exceeded expectations.
While Palantir has been the subject of scrutiny due to its relationship with the U.S. Army, recent worries expressed by certain analysts have affected its stock performance. The shares dropped from approximately $20 at the beginning of the year to $16 in recent trading.
Despite the ongoing debate surrounding Palantir’s involvement in federal-government contracts, the company consistently maintains that the real growth opportunity lies within commercial deals. The latest results confirmed this belief, with a reported 70% growth rate in the U.S. commercial business. However, it should be noted that government deals still make up a significant portion of its overall revenue.
D.A. Davidson analyst Gil Luria expressed confidence in Palantir’s market potential, stating that the company is effectively capitalizing on its expanded market opportunity and is well-positioned to sustain accelerated growth until 2024. Luria increased his target price on Palantir to $19 from $18, while keeping a Neutral rating on the stock.
Palantir’s success in the software market sets it apart from other companies, as investors place their bets on artificial intelligence (AI) investments expanding beyond hardware providers. However, the company’s high valuation may pose a challenge in winning over Wall Street. Based on FactSet data, Palantir currently trades at a price-to-earnings multiple of around 56 times.
According to Third Bridge analyst Jordan Berger, Palantir shows promise in capitalizing on the excitement surrounding AI through its AI Platform offering. However, the long-term implications of this initial success remain to be seen.
