Palantir shares rise to record levels as AI boom forecasts rise

By Zaheer Kachwala

(Reuters) – Palantir (PLTR) shares rose over 17% on Tuesday to hit a record high after the data analytics company raised its annual revenue forecast for a third time, boosting investor confidence that the AI ​​frenzy will drive demand for its Services boosted.

The company is expected to increase its market value by $15.8 billion if gains continue.

Palantir is one of the biggest winners from the generative artificial intelligence boom. The value of its stock has more than doubled this year, a rally that has raised concerns about its lofty valuation.

But the company’s third-quarter results on Monday allayed some of those fears, thanks to strong demand for its AI platform, which is used to test, debug code and evaluate AI-related scenarios. It also provides governments with software that visualizes army positions.

“Countless companies now want to analyze data in order to make faster, more informed decisions. AI is at the heart of this work and Palantir is an expert in data analytics,” said Dan Coatsworth, investment analyst at AJ Bell.

Palantir raised its 2024 revenue forecast to $2.805 billion to $2.809 billion, from $2.742 billion to $2.750 billion previously forecast.

In the third quarter, the company reported a 40% increase in its revenue from U.S. government contracts, which accounted for more than 44% of its total revenue of $725.5 million.

Palantir’s commercial revenue rose 54%, reflecting the company’s attempt to expand its private sector customer base and reduce reliance on government work.

The growth shows the commercial sector has proven to be a “fertile opportunity”, Coatsworth said.

However, Morningstar analysts warned that “any bumps in the road, such as: “Challenges in sales execution or weaker than expected sales growth or guidance could materially affect the stock’s valuation.”

Palantir is trading at a forward price-to-earnings ratio of 95.43, compared to 25.60 for Oracle and 126.92 for Snowflake.

(Reporting by Zaheer Kachwala in Bengaluru; Editing by Shilpi Majumdar)