AI Generation Software Sales Could Grow 6,260% by 2032: 1 Unstoppable AI Stock We Need to Buy Sooner (Hint: It’s Not Nvidia)

Artificial intelligence (AI) has become popular since the beginning of last year, and it’s easy to see why. This next-generation software can create original content, including text, video and images, with just a few prompts. This technology can also revolutionize business by streamlining processes and increasing productivity.

As a leading manufacturer of high-performance graphics processing units (GPUs) that provide the computing power that underpins this breakthrough technology, Nvidia (NASDAQ: NVDA) is one of the early beneficiaries of the accelerated adoption of generative AI. The company’s revenue has grown more than 100% for three consecutive quarters, and another quarter of comparable growth is on the way.

However, investors are starting to look beyond the hardware and take note of the wave of AI software adoption that will follow, and for good reason. According to Bloomberg Intelligence, sales of generative AI software are expected to grow to $318 billion by 2032, up 6,260% from just $5 billion last year.

While Nvidia will undoubtedly continue to thrive, another company is also well-positioned to benefit from the AI ​​software revolution.

The godfather of AI software

Palantir Technologies (NYSE:PLTR) first gained prominence by providing the U.S. government and its allies with artificial intelligence software that helps detect terrorists before they can strike. Recently, however, the company has focused its artificial intelligence and data analytics expertise on helping companies make data-driven decisions that lead to more successful outcomes.

Because Palantir had decades of experience in this field, Palantir was able to quickly develop generative AI solutions as the technology evolved. The result of this work is the Artificial Intelligence Platform (AIP).

Many companies would like to integrate artificial intelligence into their business operations but simply don’t know how. Palantir solves this problem by organizing AIP training camps. The company describes them as “immersive, hands-on keyboard sessions that allow new and existing customers to build live alongside Palantir engineers, all working towards the common goal of implementing AI in business.” This helps companies “go from zero to use case in just one to five days.” Palantir further notes, “We have a growing backlog of AIP Bootcamps due to overwhelming demand.”

In October, the company set a goal of hosting 500 AIP bootcamps in the coming year, but demand has not been high. In the first quarter alone, the company hosted 660 bootcamps, and the backlog continued to grow. The board cited two cases in which companies signed seven-figure deals just days after graduating from boot camp. The company has previously noted that these types of camps “significantly shorten sales cycles and accelerate the pace of new customer acquisition.”

The story continues

This shows that Palantir’s bootcamp strategy is a winner.

Show me the money

The effects are only just beginning to be visible in the company’s finances. In the first quarter, revenue increased 21% year over year to $634 million, and Palantir reports its sixth consecutive quarter of profitability – but that’s only part of the story. U.S. commercial revenues, including AIP, grew 40% year over year, while the segment’s customer base grew 69%. Other transaction revenue – the remaining value of contracts that have not yet been recorded in revenue – increased by 74%, indicating continued rapid growth.

As a result, management raised its full-year forecast: it now expects revenue of $2.68 billion, an increase of about 20% at the midpoint of expectations. Due to strong and sustained demand, management now expects full-year U.S. commercial revenues of at least $661 million, an increase of 45%. Given the strong demand, there may be many more to come.

A word about appreciation

Despite the accelerating growth and enormous opportunities the company offers, Palantir’s shares will not appeal to every investor. It trades at 179 times earnings and 21 times sales – eyebrow-raising valuations. However, these numbers do not take into account the company’s accelerating development. The price-to-earnings growth ratio (PEG) is less than 1, which is standard for undervalued stocks.

The adoption of generative AI is just beginning, and Palantir has decades of AI experience to leverage in upcoming competitions. The strategy of bringing AI to the masses is absolutely brilliant and should continue to deliver results. That’s why it’s worth buying Palantir shares.

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Danny Vena holds positions at Nvidia and Palantir Technologies. The Motley Fool holds positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.

AI Generation Software Sales Could Grow 6,260% By 2032: 1 Unstoppable AI Stocks We Need to Buy Before They Do (Hint: It’s Not Nvidia) was originally published by The Motley Fool