Palantir Technologies(NYSE: PLTR) has been one of this year's artificial intelligence (AI) winners, posting double-digit gains in revenue, reporting its biggest quarterly profit ever, and watching its shares soar in the triple digits. The software company helps its customers aggregate their data and make better use of it -- and results could be game-changing as these customers become more efficient, cut costs, and potentially develop major new products and services.
Palantir's latest earnings report, back in August, showed just how successful this 20-year-old company has become in recent times: Palantir lifted full-year guidance for total revenue, U.S. commercial revenue, and adjusted income from operations. Considering all of that good news, you may be confident about more to come in the next earnings report, scheduled for Nov. 4. Should you get in on the stock before then? Let's find out.
Image source: Getty Images.
Palantir's new source of growth
First, let's take a quick look at the Palantir story so far. As mentioned, the company has been around for many years, but for most of its history, Palantir was most associated with government contracts. These customers still are driving double-digit revenue gains at the company, but another customer is proving to be a new source of even stronger growth. I'm talking about the commercial customer.
Companies from Wendy's to United Airlines have signed up with Palantir for its data expertise. Wendy's is using Palantir's platform to improve the speed of decision-making across the company and eventually make an impact in the areas of supply chain management and waste prevention. United has deployed a predictive maintenance solution, resulting in millions of dollars saved.
In the latest earnings report, Palantir's U.S. commercial revenue climbed 55%, while government revenue advanced 23%. And, importantly, its commercial customer count has soared. The company had only 14 U.S. commercial customers about four years ago -- today, that number is nearly 300.
Palantir probably can thank its Artificial Intelligence Platform (AIP) for the surge in growth in recent times. This system harnesses the power of AI and a customer's data, and potential customers can get a taste of just how significant this can be for them through AIP "boot camps," where users can go from zero to a use case in just a few hours.
The software company has seen strong demand for its boot camps, and they've translated into deals -- in many cases, very soon after the completion of a workshop. For example, the company says that in the recent quarter, a wholesale insurance broker signed a seven-figure deal with Palantir about two weeks after a boot camp.
Palantir's upcoming earnings report
Looking ahead to next week's report, there's reason to be optimistic. AIP, launched last year, still is in the early chapters of its growth story, and the company has said quarter after quarter that demand remains high. This is within the context of general growth for the AI market, with today's $200 billion market forecast to expand to $1 trillion by the end of the decade. As companies race to capture the power of AI to improve their businesses, Palantir could continue to benefit.
As mentioned earlier, last quarter Palantir boosted its full-year expectations, predicting at least 23% and 47% gains, respectively, year over year for total revenue and U.S. commercial revenue. And the company forecasts at least a 52% increase in adjusted income from operations.
So, things are looking bright for Palantir -- but does this mean you should race to buy the stock before the Nov. 4 earnings report? Not necessarily. The best way to invest is for the long term, meaning holding quality stocks for at least five years -- and the great thing about this is it makes you less vulnerable to short-term stock movements. This means if Palantir rises or falls after its earnings report, that performance won't really impact your returns if you hold the shares for a number of years.
This takes the pressure off because you don't have to rush out and buy a stock during a particular time frame. That said, Palantir does make an interesting buy -- before or after Nov. 4 -- thanks to its track record of growth and potential for more gains in earnings and share performance over the long haul.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,217!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,153!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $403,994!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of October 28, 2024
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.
