Palantir Technologies (PLTR 3.73%) has increased revenue through the years primarily thanks to its government contracts. The company specializes in helping clients aggregate their data -- and draw conclusions that could be crucial for future operations. This is a service that's appealed to governments around the world. For example, Palantir helped the U.K. quickly ensure equitable delivery of coronavirus vaccines throughout the country.
Revenue from government contracts continues to make up the lion's share of Palantir's total revenue, and that sector still offers the company significant opportunities. But another revenue source is nipping at its heels and could become Palantir's next big growth driver.
An increase of more than 100%
Palantir has been making progress in attracting commercial customers, and over the past year, that effort got a big boost thanks to the launch of its Artificial Intelligence Platform (AIP). This service harnesses the power of AI to help customers address their data-related needs. CEO Alex Karp even says AIP is "significantly contributing to new revenue and new customers."
As you can see in the chart below, commercial clients are growing in importance -- over the past three years, commercial revenue has climbed more than 100%. And in Palantir's latest annual letter to shareholders, Karp predicted U.S. commercial revenue alone should increase at least 40% this year to more than $640 million.
Data source: Statista.
Commercial revenue is key to helping Palantir broaden its addressable market. The diversification of its revenue base could spur greater growth for the company and attract a wider range of investors.
So, what does this mean for you? Palantir's launch of AIP and its continued progress with commercial clients represent positive news. With the stock still down over 35% from its all-time high, now is a great time to get in on this top technology stock.
