It's been a big year for Palantir Technologies (PLTR +3.03%) and it's by no means over. The data analytics company's stock is up over 170%, and it may still go higher before the end of the year. There are multiple catalysts that could contribute to a higher valuation in the weeks and months ahead. Here's a closer look at why November could be a big month for the tech stock.
Palantir should deliver strong Q3 numbers
On Nov. 2, Palantir will release its third-quarter numbers for 2023, for the period that ended on Sept. 30. This could be a particularly strong quarter for the company -- earlier this year it unveiled its artificial intelligence (AI) platform, which allows businesses to tap into large language models and capitalize on the opportunities in AI.
Palantir already helps companies analyze data and make smart business decisions. With the help of AI, those decisions and tasks can be made even faster, some of which can be fully autonomous. Palantir says that users will be able to monitor any AI agents and processes in real time to ensure that not only does a company's AI operations scale up, but so too does a customer's trust in the process.
NASDAQ: PLTR
Key Data Points
Palantir's growth rate has been slowing down over the past few years, but with the Palantir artificial intelligence platform (AIP) and the strong demand due to AI, Q3 could be a big one for Palantir. Last quarter, the company issued guidance for Q3 that called for revenue between $553 million and $557 million. At the midpoint, that would represent year-over-year growth of approximately 16%. That's a bit higher than the growth rate it achieved in the second quarter.
PLTR Revenue (Quarterly YoY Growth) data by YCharts
But there's also a chance that it could outperform if demand is as strong as it may be for Palantir's products and services. After all, in Palantir's August letter to shareholders, the company said, "demand for AIP is unlike anything we have seen in the past 20 years." The company has set a high bar for itself, even though its guidance may not reflect that -- yet.
Guidance may also be strong
Oftentimes, what can get more attention for investors than a recent earnings performance is the guidance that a growth company provides. It's a sign of what's on the horizon for the business and whether the company is trending in the right direction. Palantir generates the bulk of its revenue from government customers and is a trusted provider of counterterrorism software. With AI increasing in popularity and multiple geopolitical issues around the world raising alarm bells for countries, the company be experiencing more demand than ever before.
In addition to strong growth for Q3, investors should also be looking ahead to what guidance Palantir might offer; it would be surprising if the company didn't raise its guidance for the year, which currently sits at $2.2 billion.
Will Palantir's stock become part of the S&P 500?
Another development to watch for is the stock's inclusion in the S&P 500. Palantir has become profitable this year, and that's a trend it expects will continue. It has reported a quarterly profit for three straight periods, and a fourth would pave the way for its inclusion in the S&P 500.
PLTR Net Income (Quarterly) data by YCharts
Palantir has come a long way in growing its bottom line, and making it onto the top index would mean inclusion in many funds and more investors buying the tech stock. It would be a big milestone for the company. The only question may be how quickly the S&P adds the stock (assuming Palantir posts another profit). Given its significant market cap ($37 billion) and popularity, it's likely a matter of when, not if, it will be on the index.
Should you buy Palantir's stock?
Palantir has been establishing itself as a top company in data analytics. Now that the business is profitable while also growing, it may attract more types of investors, especially once it's in the S&P 500. Even though it has already amassed some terrific gains thus far, the stock can still go higher depending on how quickly its profits rise along with revenue and what its guidance looks like next month.
The future looks bright for Palantir, and with multiple growth catalysts on the horizon, it can make for an excellent stock to hold on to for the long haul.
