Palantir shares spike as AI strategy resonates; CEO Karp silences doubters
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Palantir (NYSE:PLTR) produced second quarter 2024 financial results and an outlook above expectations as its artificial intelligence Bootcamp strategy resonates with customers.
Palantir shares were up 8% during early Tuesday trading, the morning after the Denver-based company released its latest earnings.
U.S. commercial revenue growth for the quarter increased 55% year over year.
“Q2 2024 US commercial performance tells us that Palantir’s value proposition for AI and generative AI solutions continues to resonate with customers despite a crowded and opaque market landscape,” said Jordan Berger, analyst at Third Bridge. “We’ve heard from experts that downsizing an initial deployment of Palantir’s Foundry platform could significantly broaden the company’s addressable market, and the introduction of AIP and the Bootcamp sales model appears to be successfully facilitating that transition.”
The analysts at Wedbush maintained their Outperform rating on Palantir and increased the price target to $38 from $35.
“This was a game changer quarter for the Palantir story as the AIP monetization piece on US commercial was front and center as a major growth driver,” said Wedbush analysts led by Dan Ives in a note.
“The company also closed with approximately $1B in total contract value as the company continues landing new customers while expanding existing agreements through AIP by delivering solutions at scale while capitalizing on the unprecedented opportunity for enterprise AI,” Ives added.
RBC Capital, however, maintained its Underperform rating and a $9 price target on Palantir as they considered the results mixed.
“International Commercial continued to face macro headwinds in Europe,” the Canadian bank noted. “On the other hand, profitability was solid and ahead of recent trends.”
Most analysts were impressed with Palantir’s results.
“In light of accelerating growth rates and burgeoning profitability, I’m reiterating my buy rating on this stock,” said Seeking Alpha analyst Gary Alexander.
“The notion that the current macro climate and a possible recession may be impacting deal closings may be true for other software peers, but it’s not true of Palantir,” he added.
Palantir CEO Alex Karp sounded confident in the company he has built as it produces ever larger revenue from commercial and government clients.
“Of course, all along the way, we had many, many doubters. We had people that thought we would never be profitable … now we are over seven quarters in profitability,” Karp said during the earnings call.
Karp stood firm in the work his company has done for the U.S. government and its allies through defense contracts.
“And last not least, the world is on the precipice of what could be a very severe – a set of violent interactions in the Middle East,” Karp said. “And it goes without saying that at Palantir, we know where we stand, and we are very much supporting America and its allies in the Middle East, including Israel.”