Palantir: Rising Star in the Stock Market

Palantir has proven to be one of the hottest stocks this trading year, boasting a remarkable price increase of over 250%. The company has gained significant value through its impressive business results and inclusion in the S&P 500. However, many investors are questioning whether the stock is still worth buying after these considerable gains. Palantir has established itself as a leading company in data analysis through its collaboration with the U.S. government, particularly in critical areas such as counter-terrorism and the tracking of COVID-19 cases. Yet, it is especially the use of their Artificial Intelligence Platform (AIP) and their push into the commercial sector that form the basis for the current optimism surrounding the stock. In recent quarters, the company has shown an impressive growth curve in the U.S. commercial sector, driven by a growing number of customers who are enthusiastic about the versatility of the AI platform. In the last quarter, revenue in the U.S. business grew by 54% to $179 million, with demand for AI remaining strong. The number of customers in this area increased by 77% compared to the previous year, and the total contract value rose by 37% to nearly $300 million. Collaboration with its largest customer, the U.S. government, is also experiencing a significant upswing as the government increasingly relies on AI solutions. Revenue from U.S. government entities rose 40% to $320 million in the last quarter. It is evident that all government sectors, including the White House, Congress, defense, and intelligence services, are increasingly utilizing large language models (LLMs). However, Palantir’s greatest future opportunity lies in transitioning customers from AI prototyping to production. While the company is continuously acquiring new customers, the real growth lever will be expanding within these customers. With an exceptionally strong net dollar retention of 118%, Palantir is already adept at expanding its existing customer base. The true potential, however, unfolds with the many newly acquired AIP customers from the past year, who are just beginning their first steps with prototypes. The ability to deepen these customer relationships and transition to the production phase could fuel revenue growth in the long term, thus potentially driving the stock price even higher.