Palantir (NYSE: PLTR) is one of the most popular stocks for retail attention on the U.S. stock market, as the big data analytics company brings together two of the big hot topics of the moment — “military” and “artificial intelligence.”

Initially, Palantir was seen as a military engineering concept because its business mainly served US defense departments such as the FBI, NSA, and even involved the CIA. havingReportClaim their software helped the US military find Ben Laden.

By 2023, Palantir was transformed into an AI concept stock. Thanks to the growth potential of their Artificial Intelligence Platform (AIP), someInvestment InstitutionsEven liken it to “Messi” in the field of artificial intelligence.

Palantir's share price has risen more than 200% since 2023, mainly thanks to optimistic expectations for AI, will this momentum continue?

This phase of opportunity will take you to a deeper understanding of this mysterious big data company, understand why its stock is plummeting, what financial data to look out for, and what opportunities and risks the company may face in the future.

PLTR Stock Price Overwhelms Like a Roller Coaster

Palantir is a technology stock with a very high price volatility. It can be divided into three phases from its launch in 2020 to the present:

• Meme Stock Surge (2020.9-2021.1)

Palantir on the NYSE on September 30, 2020Listing, opened at $10 and ended up closing at $9.5. At that time, the marketthinksSoftware companies like Palantir will dominate the data platform market in the future, causing a lot of attention from institutional investors, including ARK Invest's wooden sister, ARK bought the stock in Q4 2020.

The move raised the heat of Palantir in the Reddit community and was sought after by many retail investors who continuously pushed the stock price higher and became part of the meme stock.

In January 2021, Meme hype peaked, with Palantir's share price hitting an all-time high of $45 a share, up 350% from its IPO price.

• Meme Stock Surge Retreats (2021.1-2022.12)

But the outlook is short, with Palantir stock surging sharply and overvaluing the entire tech industry, Palantir shares were boosted by short selling data after the Meme stock hype faded, reaching a peak of 1.02 million shares in 2021.

Going into 2022, investor concerns about Palantir's performance growth prospects, coupled with a poor overall market environment, caused Palantir's share price to fall sharply.

A drop of 87% from a high of $45 in January 2021 to a low of $5.8 in January 2023, investors were also very frustrated.

• AI boom (2023.01- to date)

After January 2023, the situation reversed again. As the overall market warmed up, coupled with the AI hype, Palantir's share price experienced another wave of amazing gains. As of November 10, 2023, Palantir's share price increase has reached more than 200% this year.

Ordinary investors may ask, is this AI fever just hype for Palantir, or can it actually boost the company's performance?

Will AI be the new growth engine? Focus on revenue growth

As a technology growth stock, Palanitr is most concerned about its growth potential, depending on the relevant financial metric, namely revenue growth.

The main issue that has plagued Palantir over the past year has been a slowdown in revenue growth. In 2022, the company's revenue growth slowed to 24%, well below the 40% in 2021 and 47% in 2020.

Palantir's income is divided into two business segments: government departments and commercial departments. Palantir's government business has been slowing due to uncertainty over government orders and land conflicts. In addition, as macroeconomic instability forces companies to rein in spending, their commercial operations are also struggling. As a result, Palantir's overall revenue growth has slowed for several consecutive quarters until Q3 2023.

As a result, some investors expect AI to become Palantir's new growth engine.

Earlier this year, Palantir released its latest artificial intelligence platform AIP. The Q3 2023 report shows that just 5 months after its release, more than 300 institutions are already using the AIP platform, spread across sectors including energy, finance, healthcare.

Looking at the 2023 Q3 results, Palantir's revenue growth halted its downward momentum, with total revenue growing 17% year-on-year, with revenue growth of 17% year-on-year, with revenue growth in the commercial segment rebounding to 23%.

Investors are also optimistic about Palantir's growth prospects as AI sees potential drivers for company performance, with Palantir's share price up 20% after the quarterly report.

But it's worth keeping in mind that one quarter's data can be misleading as to whether AI can truly be Palantir's new growth engine and whether the company's subsequent revenue will continue to grow rapidly.

Palantir Achieves Profits for Four Consecutive Quarters

Another indicator that investors should pay attention to is profitability, specific to the relevant financial indicators, namely gross margin and net profit.

In general, the higher the gross margin indicates the stronger the competitiveness of the company's products. Palantir's adjusted gross margin for the third quarter of 2023 reached 82%, up 2% year-on-year. This is a positive signal that may indicate that Palantir's products are relatively competitive in the data analytics market, without being priced higher or cheaper.

In addition, by observing this financial indicator of net profit, it is possible to find that Palantir's profits have been relatively stable over the past year. For the third quarter of 2023, Palantir reported a net profit of $7150 million under GAAP accounting criteria, compared with a loss of $1,239 million for the same period last year.

Palantir has been profitable for four quarters in a row after a Q4 net profit loss last year, indicating that the company is doing well in controlling costs.

“We have been able to maintain flat expenses for four quarters in a row, while investing heavily in our products, including AIP, and re-accelerating our revenues,” said David Grazer, CFO of the company in 2023Q3.

There are analysts who believe that Palantir may be included in the S&P 500 Index

Analysts at The Motley Fool say that Palantir's stock has met the criteria for inclusion in the S&P 500 index for four consecutive quarters in a row, according to analysts at The Motley Fool.

Joining the S&P 500 is something that many companies dream of, as being included in the index means that the stock will receive more attention and attract more potential investors, plus more index funds that track the S&P 500 will likely incorporate the stock into their portfolio, increasing Liquidity of stocks.

Although Palantir already meets the requirements for inclusion in the S&P 500 index, this means that it will automatically be included in the index. Inclusion of the shares in the S&P 500 still requires the approval of the Committee and is therefore guaranteed to succeed.

valuing

Analysts at The Motley Fool believe Palantir shares are more valuable in valuation than other growth stocks, compared to SerivceNow and HubSpot in the same industry. Palantir's Forward P/E is up to 75x, and ServiceNow and HubSpot's forward market earnings are relatively low at 47x and 65x, respectively.

Therefore, investors need to assess these risks carefully and make decisions based on their risk preferences and investment strategies.

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