IBD Stock Analysis
- Stock working on 20.24 cup-base buy point
- Shares poised to form handle this week
Industry Group Ranking
* Not real-time data. All data shown was captured at
4:47PM EDT on
Palantir Technologies (PLTR) is the IBD Stock of the Day as the software maker regains momentum from a technical view. Bulls and bears on PLTR stock continue to hash out fundamental issues on Palantir.
Bulls point to improved profitability for PLTR stock. Bears focus on decelerating revenue growth for Palantir stock. Then there’s the expanding opportunity involving artificial intelligence.
Third quarter earnings are due Nov. 2. Analysts polled by FactSet predict adjusted profit of 6 cents per share, up from 1-cent profit a year earlier. Revenue is expected to rise 18% to $556 million, slowing from 22% growth in the year-earlier quarter.
PLTR stock hit a 52-week intraday high on Aug. 1 as AI stocks continued to rally. While PLTR stock pulled back from that 52-week high, technical ratings have recently improved.
Palantir stock holds a 20.24 buy point from a newly forged cup base. On a daily chart, PLTR stock could be forming a handle. If that happens, aggressive investors would view a buy point of 18.44 as actionable.
PLTR Stock: Technical Ratings
On the stock market today, Palantir stock traded flat, closing unchanged at 17.36. PLTR stock has more than doubled in 2023.
Meanwhile, PLTR stock has an IBD Relative Strength Rating of 99 out of a best-possible 99, according to IBD Stock Checkup.
Further, the software stock also holds an IBD Composite Rating of 99 out of a best possible 99.
IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. Also, the best growth stocks have a Composite Rating of 90 or better.
PLTR stock has an Accumulation/Distribution Rating of B. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling.
The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
Palantir has offered government customers AI tools for intelligence gathering, counterterrorism and military purposes. Also, those AI tools relied upon pattern recognition to create predictive models.
Palantir Stock: New AI Platform
Palantir now is integrating generative AI into its software platform.
Generative AI models process “prompts,” such as internet search queries, to enable users to create generally high-quality text, images, video and even computer programming code.
In addition, Palantir aims to sell generative AI products into commercial markets such as health care.
Palantir announced its newest offering, the “Artificial Intelligence Platform,” early this year. In mid-September, Palantir said the AIP now has 150 users, up 50% within the last month.
At a recent customer conference, Palantir emphasized its go-to-market strategy, noting how it aims to get customers to launch pilot projects involving generative AI tools.
Palantir has not disclosed pricing for AI products. Analysts say Palantir needs to show progress developing new revenue streams from generative AI.
PLTR Stock: U.K. Contract Up For Grabs
Palantir stock fell on its second-quarter earnings report. Quarterly profit and sales met analyst estimates. But management’s outlook for PLTR stock disappointed some investors. The company also announced a $1 billion buyback for PLTR stock.
In addition, PLTR stock trades well below the software maker’s all-time intraday high of 45 set in late January 2021.
Meanwhile, Palantir’s governance structure gives Karp and co-founder Peter Thiel long-term control of the company through super-voting rights.
Aside from AI, PLTR stock could get a boost if the company wins a new contract from the United Kingdom’s National Health System. The NHS used Palantir during the coronavirus emergency. But a bigger contract worth roughly $595 million is now up for grabs. Analysts see Palantir as the front-runner in the contract bidding.
Government Biggest Customer
In addition, Palantir engineers often customize software for the needs of customers. That extends the time needed to ramp up “digital transformation” projects, which means that after Palantir wins a contract, it may take awhile to generate revenue.
The Denver-based company offers three platforms: Palantir Gotham is used primarily by government agencies; Palantir Metropolis is geared to banks, financial services firms and hedge funds; and Palantir Foundry is used by corporate clients.
Palantir gets nearly 60% of its revenue from government agencies. Decelerating revenue growth is an issue. In 2022, revenue growth slowed to 24% from 40% in 2021 and 47% in 2020.
Meanwhile, one issue for PLTR stock is that large U.S. government contracts are coming up for renewal.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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