Is PLTR stock a buy? Here’s what technical and fundamental analysis shows about Palantir stock

Bulls and bears have a lot to talk about Palantir Technologies (PLTR). Bulls point to improved profitability of PLTR stock. Bears are focusing on slowing revenue growth for Palantir stock. Then there’s the buzz around AI stocks that are worth considering for the data analytics software company.

As of May 28, PLTR shares are up nearly 22% in 2024. Some technical ratings have also weakened. PLTR stock is trading below its 50-day moving average.

Meanwhile, the company’s shares have fallen from a high of 27.50 on March 7. Moreover, Palantir stock dropped from the IBD 50 growth stocks list.

Enterprise software stocks have generally underperformed in 2024. Investors don’t currently expect software companies to significantly monetize generative AI, or “conversational AI,” until late 2024 or 2025. Here’s a look at the enterprise AI market.

The iShares Expanded ETF Technology and Software Sector (IGV), an industry index covering Sales force (CRM) and many large software companies gained 5% in 2024.

Palantir Stock Valuation Amid AI Hype

Meanwhile, Palantir shares fell after its first-quarter earnings report as analysts focused on growth in the U.S. commercial market amid weakness in the software maker’s international business.

“Palantir posted upbeat first-quarter results, helped again by continued momentum in its commercial operations in the U.S., where it is one of the first software companies to significantly monetize generative AI,” a Deutsche Bank analyst said in the report Brad Zelnick. “The ability to accelerate more in 2024 is limited by the Palantir government and international commercial enterprises that do not yet see commercial-like AI development in the U.S.”

When it comes to news, investors have a lot to think about. Oracle (ORCL) and Palantir announced a cloud computing alliance.

In addition, Palantir won a new $178 million U.S. Army contract for Project TITAN, an artificial intelligence battlefield system.

At a customer conference on March 7, Palantir unveiled its artificial intelligence platform, deployed in early 2023. The artificial intelligence platform is gaining increasing popularity among commercial customers, Palantir said at the conference. He cited information about new clients, including: General Mills (GIS), CBS and Aramark (ARMK).

“Over 60 clients attended the event and showcased their work with AIP,” Jefferies analyst Brent Thill said in the report. Amid the large rally in PLTR’s share price, Thill added: “The biggest concern remains a valuation of 18 times (estimated) calendar year 2025 revenues, making it the most expensive name in our coverage.”

Meanwhile, here’s a look at Palantir’s international business, including how its AI is faring in Europe.

PLTR Stock: Will artificial intelligence drive growth?

Additionally, Palantir shares are up 167% in 2023. The Nasdaq composite rose 43%, while the S&P 500 rose 24%.

Moreover, Palantir is one of the artificial intelligence stocks worth watching.

PLTR stock bulls point to artificial intelligence software as a growth driver. Palantir has already leveraged AI capabilities with government clients for intelligence gathering, counterterrorism and military purposes.

Palantir now aims to use generative AI to drive growth in the commercial market. The software maker has expanded into healthcare, energy and manufacturing.

Palantir did not disclose pricing for its AI products. Some analysts say Palantir needs to show progress in developing new revenue streams from generative AI.

PLTR Shares: Management Structure

In 2023, Palantir announced a $1 billion buyout of PLTR shares. However, as of December 31, he had not purchased any shares.

Additionally, PLTR stock is trading well below the software maker’s all-time high of 45 daily highs set in late January 2021.

Meanwhile, Palantir’s management structure gives Karp and co-founder Peter Thiel long-term control of the company through super voting.

The company’s name comes from palantiri, i.e. “seeing stones” resembling a crystal ball from the series of books and films “The Lord of the Rings”. Palantir means “one who sees from afar.”

Additionally, Palantir engineers often customize software to meet customer needs. This increases the time it takes to accelerate “digital transformation” projects. So once Palantir wins the contract, it may take some time to generate revenue.

The Denver-based company offers three platforms. One of them is Palantir Gotham, mainly used by government agencies. Palantir Metropolis is home to banks, financial services companies and hedge funds. Palantir Foundry is used by enterprise customers.

The largest government market

Palantir gets almost 60% of its revenue from government agencies. The problem is that revenue growth is slowing. In 2022, revenue growth slowed to 24% from 40% in 2021 and 47% in 2020. In 2023, revenue increased 17% year-over-year to $2.23 billion.

For the quarter ended March 31, Palantir’s generally accepted accounting principles, or GAAP, earnings were 8 cents per share, up 60% from a year earlier. Revenue increased 21% to $634 million.

Analysts predicted Palantir would earn 8 cents a share on revenue of $615 million.

Denver-based Palantir said government revenue rose 16% to $335 million, compared with estimated sales of $322 million. Additionally, commercial revenues increased 27% to $299 million, topping estimates of $292 million.

U.S. commercial revenues increased 40% compared to 70% in the fourth quarter of 2023. Additionally, Palantir said it completed 136 U.S. commercial transactions in the quarter, up from 70 in the first quarter of 2023.

Meanwhile, Palantir reported $24 million in revenue related to investments in special purpose acquisition companies, or SPACs.

Additionally, Palantir said it currently expects “revenues from our U.S. commercial operations to grow 45% or more in 2024 compared to 2023.”

Palantir said it expects revenue of $651 million for the current quarter ending in June, halfway through forecasts. Analysts predicted sales of $643 million.

Palantir slightly increased its 2024 revenue forecast to a range of $2.68 billion to $2.69 billion.

Palantir creates partnerships

In November 2022, Palantir took full ownership of the company’s software sales joint venture in Japan. The largest client is the Japanese insurance company Sompo Holdings.

Then in 2023, Palantir began consolidating joint venture revenues in its earnings reports.

Moreover, Palantir recently expanded its cloud computing partnership with Microsoft (MSFT), which targets government agencies.

To accelerate the adoption of artificial intelligence software in enterprises, Palantir and IBM have formed a global partnership. As part of the deal, Palantir also made its Foundry software available to IBM cloud computing customers. The Foundry platform is a centralized data operating system that allows users to manage, filter, and visualize big data.

Technical analysis of Palantir stock

Palantir’s relative strength rating is 81 out of a best possible 99.

Additionally, Palantir stock has a Composite Rating of 93 out of a best possible 99, according to IBD Stock Check-up.

IBD’s Composite Rating combines five separate, proprietary ratings into one easy-to-use rating. Top growth stocks have a Composite Rating of 90 or higher.

PLTR stock has an accumulation/distribution rating of C-minus. This rating examines the stock’s price and volume movements over the last 13 weeks of trading. A+ indicates heavy institutional buying; E stands for intense selling. Think of a C rating as neutral.

Meanwhile, Palantir shares fell below their 50-day moving average after reporting first-quarter earnings. As of May 28, Palantir’s shares are not subject to appeal.

Plus, browse IBD stock lists and other IBD content to find dozens of other top stocks to buy or watch.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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