Investing in companies that are developing world-changing technologies can lead to life-changing returns. Here we'll look at a company involved in artificial intelligence (AI) software, and another business making a splash in the electric car market that could deliver tremendous returns over the long term.
1. Palantir Technologies
Palantir Technologies (PLTR 3.73%) is a leading software developer that helps organizations analyze massive amounts of data to make better decisions. The stock tripled from last year's lows, but the recent acceleration in revenue and profits could bode well for investors in 2024.
Like many other tech companies, Palantir experienced slower revenue growth earlier this year amid macroeconomic headwinds. What seemed to be holding the stock back more than anything else was weak profitability. But in early May the stock took off after Palantir said it expected to be profitable each quarter through the end of the year, and it hasn't looked back.
Revenue accelerated in Q3, up 17% year over year. Palantir is getting faster at converting new customers, and it nearly tripled the number of users on its artificial intelligence platform. It's also delivering this growth while still dealing with uncertainty in the economy, but it also expects accelerating growth from its U.S. government business, which is a catalyst.
The growing demand for its software platforms is causing profits to explode, with net income up 157% over the previous quarter. The strong momentum in customer demand could further push profits up and cause the stock to head higher in 2024 and beyond.
2. Rivian Automotive
Rivian Automotive (RIVN 6.10%) is a leading electric car maker that is experiencing exponential growth. While it offers two truck models for the consumer market, its claim to fame is supplying thousands of commercial delivery vans for Amazon. The stock is down, as investors remain skeptical about whether the company can profitably grow revenue over the long term. But there are good reasons to believe it will, which could lead to explosive gains over the next few years.
Rivian's quarterly vehicle production has scaled quickly, growing from 1,003 in 2021 to 16,304 in the recent quarter. Revenue is growing along with production increases, but the company also reported a massive loss from operations of $1.4 billion on just $1.3 billion of revenue in the third quarter.
Nonetheless, management is making strides to bring costs down. Losses narrowed from over $1.7 billion in the year-ago quarter, as gross profit per unit increased each quarter this year. Management expects new technologies to reduce production costs even further.
A major growth catalyst is the recent announcement that Rivian will sell its commercial vans to other companies beyond Amazon. This is great news, but it's also worth noting that the e-commerce giant is the company's largest shareholder, with a stake worth $3.8 billion at the end of Q3. Amazon's investment is a significant vote of confidence in the future value of Rivian's business. It could succeed in becoming one of the top electric car makers in the world, and that could potentially lead to massive gains to shareholders in the years to come.
