In the world of artificial intelligence (AI), Palantir (PLTR 0.87%) has been a staple for a long time. The company built its platform from the ground up with AI in mind and created a successful offering for government and commercial customers alike. And it recently discussed a new AI initiative that has the potential to impact the business significantly.

Read on to find out about this new product development and why it makes the stock a screaming buy.

Palantir is an AI-first platform

Palantir primarily uploads mounds of data through its software, then creates actionable insights. For example, a 911 dispatcher could collaborate with a hospital using Palantir's software to determine where to route an ambulance.

By delivering up-to-date information in a clean dashboard, it facilitates the best possible decisions at a moment's notice. This same software has been used by various government agencies and the military for many purposes, giving Palantir a broad customer base.

And the company's latest product could be a game changer for existing and new clients.

Its artificial intelligence platform (AIP) is the company's large language model (LLM), allowing Palantir to deliver an interactive chatbot to its clients. This segment of AI is the same branch of technology used by products like OpenAI's ChatGPT, and with Palantir developing its in-house model, the demand for it has been astounding.

By creating an LLM that works with Palantir's data processing capabilities, users can determine the best action for a particular outcome. Returning to the hospital example, a specific incoming patient might need a particular operation, so the hospital manager could interact with the AIP to ask if a brain surgeon is available at a particular hospital.

Ryan Taylor, chief business affairs and legal officer, said during the first-quarter conference call, "We're already seeing unprecedented demand for AIP, and we are reorganizing our efforts to aggressively capitalize on the interest."

Shyam Sankar, chief operating officer, discussed a major insurance company that deployed Palantir's AIP in a few days to automate claims processing. The ability to rapidly roll out this product to governments and commercial companies makes it a game changer.

With the stock trading at an attractive price, it looks like a strong buy.

Palantir's profitability is steadily improving

In the first quarter, Palantir squeaked out another net profit of $17 million from $525 million in revenue. While that's not an outstanding profit margin, it shows management's commitment to profitability, something few other young software companies can claim. And management gave guidance that it should achieve profitability on the basis of generally accepted accounting principles (GAAP) in every quarter this year, an upgrade from last quarter's guidance of a GAAP profit for the entire year.

Still, the price-to-earnings (P/E) ratio is useless because Palantir hasn't been profitable on a trailing-12-month basis. But if we use forward-looking earnings and its price-to-sales (P/S) ratio, we can determine if the stock looks like a buy here.

PLTR PE Ratio (Forward) Chart

PLTR PE ratio (forward), data by YCharts.

At 55 times forward earnings, the stock looks a bit pricey. But it hasn't achieved its target profit margins, and this metric should come down each quarter if better guidance is continuously given. From a P/S standpoint, Palantir is a bit expensive at 13 times, especially when its 18% growth rate is compared with other software companies.

But with one of the few business-focused chatbot products available, Palantir could have a huge market in front of it. Couple that with its deep integration into government agencies, and it has a long runway ahead.

Because of that, I'd say Palantir's stock looks like a great buy at these prices.