Predicting Palantir Technologies' Position in the Next 3 Years
Palantir Technologies, with its ticker PLTR, shook up the market when it went public in September 2020. Since then, the company, renowned for providing analytics and software platforms to government agencies, has seen its shares skyrocket an impressive 608%. This soaring success outpaces the 61% gain of the Nasdaq-100 Technology Sector index over the same period, with a significant surge starting from April 2023 after the company entered the artificial intelligence (AI) software market.
Palantir officially launched its Artificial Intelligence Platform (AIP) on April 27, 2023. Since then, the stock has witnessed a 760% surge. This boom is attributed to the huge potential of the generative AI software market, a space that Palantir is aiming to conquer with AIP.
However, the question arises: does Palantir have enough fuel to keep the momentum going over the next three years given its hefty valuation?
AIP Starts to Show Its Power
To assess Palantir's transformation since AIP, let's examine its performance before diving into AI software platforms. The company reported a 18% revenue boost in Q1 2023, with commercial revenue up 15% and government revenue up 20%. Yet, the revenue pipeline was not solid at this time, as evidenced by its remaining deal value, which dipped to $3.4 billion in Q1 2023 from $3.5 billion in the previous year.
Fast forward to the present, AIP's influence on Palantir is apparent. The company's revenue skyrocketed 30% in Q3 2024 to $726 million. The commercial business saw a significant increase, jumping 27% year-over-year. The government business also received a boost, jumping 33% to $408 million. Furthermore, the revenue pipeline has improved, with Palantir's remaining deal value increasing 22% to $4.5 billion.
Palantir's top brass has confirmed that AIP plays a crucial role in helping the company secure more customers and drive more spending. On its November earnings call, CFO Dave Glazer emphasized that AIP "is driving both new customer conversions and existing customer expansions."
Palantir: A Titan in Three Years?
The AI software platforms market, which Palantir is targeting with AIP, is currently in its early stages of growth. According to research firm IDC, this market is projected to reach $153 billion in revenue by 2028 – a huge leap from its current $27.9 billion value. The firm predicts that AI software platforms will grow at an annual rate of around 41% during this period.
This growth projection bodes well for Palantir, as the company has already proven itself as a leading provider in this space. In 2021, according to IDC, Palantir was the top provider of AI software platforms by both market share and revenue.
Assuming Palantir manages to maintain a 10% share of the AI software platforms market by 2028, its annual revenue could soar to $15 billion or more. This would translate into an annual growth rate of almost 40% based on the company's expected $2.8 billion revenue in 2024.
But at its current valuation, with a price-to-sales ratio of 63, does Palantir justify its premium? The potential for rapid growth in the AI software platforms market and Palantir's established position in this sector suggest that its hefty valuation is not unwarranted.
As of current levels, Palantir's market cap could swell to $240 billion in five years if it can sustain its swift growth rate. But with the potential for it to claim an even larger share of the AI software platforms market, investors could be looking at far more substantial gains.
Sources:
[1] Fool.com
[2] IDC
[3] Barron's
[4] Seeking Alpha
[5] Ad Age.com
- With the successful launch of its Artificial Intelligence Platform (AIP), Palantir has been actively investing in research and development to expand its presence in the rapidly growing AI software market, which is projected to reach $153 billion by 2028.
- The company's strategic financial planning and effective money management in the AI sector have been key to its impressive 760% stock surge since AIP's launch, making Palantir a promising investment opportunity for finance enthusiasts interested in technology and AI.
