Palantir (NYSE: PLTR) is gaining traction as a notable player in the artificial intelligence (AI) sector. Historically associated with providing consulting services to the U.S. government and its allies, particularly in military spheres, Palantir has recently surged as a frontrunner in the AI landscape. This shift is largely attributed to the positive reception of its latest offering, the Palantir Artificial Intelligence Platform (AIP). The success of AIP is reshaping perceptions about Palantir, drawing attention from Wall Street analysts. Dan Ives from Wedbush Securities, for instance, highlighted AIP as the “launchpad of AI use cases” in a recent social media post. He also issued a research report with a $35 price target for Palantir stock, indicating a potential 36% upside as of the market close on March 11. Let’s explore how Palantir is attracting customers and delve into the expanding deployment of its software across the AI landscape.
How Palantir is winning in AI
Following the launch of AIP last April, Palantir adopted a distinctive marketing approach by hosting immersive seminars known as “boot camps.” These events provide potential customers with the opportunity to test and demo Palantir’s various platforms, allowing them to envision how the software can contribute to their AI initiatives. This lead generation strategy has yielded positive results, with Palantir conducting over 500 boot camps in 2023 alone, leading to a 35% increase in its customer base. The swift adoption of AIP and its effectiveness in converting leads into paying customers have contributed to margin expansion and consistent cash-flow generation for Palantir.
Despite competing in a crowded landscape dominated by well-funded rivals like Microsoft and Amazon, Palantir shows no signs of deceleration.
Use cases are exploding
Last week, Palantir hosted AIP Con 3, where new customers joined the company’s executive leadership to demonstrate how its software is being utilized across various industries. Here are some highlighted use cases:
- Lennar is employing Palantir to optimize its land development bidding process.
- General Mills is leveraging Palantir for its logistics and supply chain operations.
- Archer Aviation, a favorite of Cathie Wood, is utilizing Palantir to enhance maintenance and flight routing protocols.
- Lowe’s has implemented Palantir to improve work queues and enhance agent satisfaction.
Should you invest in Palantir stock?
Given Palantir’s remarkable performance in 2023, investors responded by driving up the company’s stock price, which surged by 167% over the year. The ongoing enthusiasm surrounding the broader AI narrative has further propelled Palantir’s stock by an additional 45% since the beginning of this year.
Expectedly, this surge in buying activity has elevated Palantir’s valuation multiples, positioning its shares at a noticeable premium compared to other software-as-a-service (SaaS) peers.
Palantir is swiftly navigating the market landscape as it seeks to outpace major tech players. Additionally, with $3.7 billion in cash reserves and no debt on its balance sheet, coupled with consistent profitability, Palantir stands in a robust financial position relative to many other software companies that are burning through cash.
The diversity of applications represented by the list of use cases mentioned earlier is highly encouraging. Companies of various sizes and across different industries are embracing Palantir’s technology.
As boot camps expedite the conversion of leads into paying customers, Palantir enjoys a first-mover advantage with these new accounts in terms of their AI strategies. This presents the company with a lucrative opportunity to collaborate closely with its customers, identify new use cases, and expand its presence within organizations over time.
This dynamic underscores the validity of Ives’ perspective. AIP serves as a springboard for Palantir as it continues to penetrate new customer markets and expand within its existing customer base. Despite the recent surge in the stock price, now may be an opportune moment to employ dollar-cost averaging and acquire some shares in Palantir.