Palantir (NYSE:PLTR) emerged as a promising player in the artificial intelligence (AI) landscape, gaining momentum post-earnings in May and drawing comparisons to industry-heavyweight Nvidia (NASDAQ:NVDA). Although PLTR’s summer surge has cooled, the company remains steadfast in its pursuit of AI dominance while focusing on improving its margins.
Palantir’s CEO, Alex Karp, expressed the company’s ambition to outshine competitors in securing government contracts, which have been its core revenue source. As Palantir seeks to expand its services to commercial clients, it’s possible that the stock’s growth potential has been underestimated by both investors and analysts.
Admittedly, Palantir’s business dealings with the U.S. government make it a more complex entity to decipher compared to tech giants like Nvidia or the FAANG companies with AI exposure. However, as a significant player in big data analytics, Palantir is making significant strides in the AI realm, not only in the government sector but also commercially.
While Palantir may have been overshadowed by mega-cap peers such as Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG) in the past year, it would be unwise to disregard its potential as it strives to break free from the shadow of larger AI competitors by expanding its AI offerings.
Palantir’s Strong Footing in AI Attracts Attention
Palantir is actively investing in bolstering its AI capabilities, and it’s not just government entities taking notice. The company is expected to secure more government contracts in the future while simultaneously exploring partnerships with commercial firms.
Recent news of Palantir’s potential £480 million, five-year contract with the U.K. National Health Service (NHS) has generated optimism. Additionally, Palantir’s partnership with PwC, which will leverage the Foundry platform to enhance AI capabilities, marks an intriguing development in the corporate world as companies prepare for the AI-driven fourth industrial revolution.
Despite these positive developments, Palantir’s stock has been consolidating since June 2023. The ongoing downtrend in the broader markets during September and October may hinder PLTR’s independent growth, without support from the broader basket of AI-driven tech firms.
Nonetheless, this period presents a favorable opportunity for investors to acquire Palantir shares while the company continues its AI-focused endeavors.
Palantir: A Unique AI Player
In an era where every company touts its AI capabilities, Palantir stands out due to its trustworthiness in the eyes of major governments. As it opens doors to the commercial sector, Palantir is poised to sustain its growth without compromising its margins.
Transitioning from government contracts to corporate deals appears more manageable than the reverse. Some Wall Street analysts, like Dan Ives of Wedbush Securities, maintain confidence in Palantir stock, even as it navigates a potential flatline toward year’s end. Ives anticipates that Palantir will benefit from commercial tailwinds in the latter half of the year and into 2024, a sentiment shared by many.
Palantir’s Bright Prospects
Dan Ives maintains an outperform rating on Palantir with a $25.00 price target, nearly 59% higher than the recent closing price of $15.73. While Ives is known for his optimism regarding AI stocks, his price target for Palantir doesn’t seem unrealistic as the company continues to flex its AI prowess.
With the tools at its disposal, Palantir appears well-positioned to continue its upward trajectory, with CEO Alex Karp leading the way into a promising year ahead.
Featured Image: Megapixl
Author Faith Yakubu