PLTR Stock Soars as Retail Investors Bet Big on Palantir’s AI Future

Palantir Technologies (NYSE:PLTR) stock surged on Wednesday, rising as much as 12.3% in early trading and maintaining an 11% increase as of the Afternoon. In Thursday’s session, this momentum continued, with PLTR stock closing the day 2.4% higher.

These sorts of high-momentum moves in Palantir are clearly tied to the company’s core AI-related business, as the hype train around artificial intelligence continues to motor forward, with no end in sight.

Other additional news spurred interest in Palantir, including an announcement the company won a significant Army contract worth $178.4 million for 10 Tactical Intelligence Targeting Access Node (TITAN) systems. With the potential for more contracts, Palantir’s track record in providing AI solutions to the government remains strong.

Palantir’s stock has surged 187.6% in the past year, with a 38.7% increase since the year’s start, surpassing market indices. Strong Q4 2023 results drove investor enthusiasm, including 20% revenue growth and profitability. Through its robust AI adoption, Palantir’s upward momentum may continue.

U.S Army on Developing Next Gen Target System

The company’s recent $178 million deal in developing the Tactical Intelligent Target Access Node (TITAN) between Palatir and the U.S Army has sparked significant interest from investors. Palantir will construct 10 TITAN ground stations, enhancing data integration and supporting advanced targeting for soldiers. Col. Chris Anderson expressed excitement for TITAN’s transformative capabilities to battlefield intelligence following a rigorous evaluation against an RTX-developed system.

Palantir’s senior vice president for defense solutions, Bryant Choung highlighted the importance of soldier feedback in shaping the winning system. The Army ensured rapid deployment through regular demonstrations or soldier touchpoints while incorporating soldier input. Palantir plans to refine its TITAN prototype over the next two years, delivering all 10 systems, including advanced variants integrating space sensor data and basic variants installed on tactical vehicles.

Choung highlighted the system’s software-heavy design, allowing for modular upgrades tailored to the Army’s needs. The contract includes integrating new technologies, with a decision on total production expected by 2026. Palantir estimates the potential procurement of 100 to 150 systems, with subcontractors including Northrop Grumman, Anduril Industries, L3Harris, Pacific Defense, and Sierra Nevada Corporation. Anduril’s role encompasses hardware design, development, and scale manufacturing for TITAN.

PLTR Stock Gets an Upgrade Target

PLTR stock has surged beyond most analysts’ expectations, with Mizuho raising its target to $21 from $18. However, with PLTR stock currently trading around $27 per share, there’s plenty of enthusiasm baked into its stock price at the moment.

Accordingly, there are some bears who are now pointing to valuation concerns with the company (though this has been an ongoing issue for some time, with respect to profitability). That said, bears have been burned thus far by shorting this stock, given its recent span of positive profitability and outsized growth. I’ve shifted my view in this regard (and I’m happy I didn’t short this one).

Small investors, not professionals, drive Palantir’s surge. Despite analysts’ warnings and comparisons to meme stocks, optimism remains. The TITAN contract ignites hope for more gains, with a favorable price-to-sales ratio compared to other large AI names. Additionally, Palantir’s AI tech gains importance amid global tensions. CEO Alex Karp doesn’t shy away from the war narrative.

Palantir Is a Buy, But Be Cautious

Investors should focus on Palantir’s adaptation of AI systems for enterprise use, with implications for inventory management and customer service. In Q4, this drove a 70% increase in U.S. commercial revenue and a 107% surge in total contract value. With a 215% gain in the past year, Palantir’s stock appears pricey by traditional metrics, but its forward price/earnings-to-growth ratio suggests undervaluation. 

As AI demand rises, Palantir’s expertise could lead to significant returns.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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