One of the up-and-coming players in the artificial intelligence (AI) arena is Palantir (PLTR 3.73%). The company was long considered a consultant to the U.S. government and its Western allies given its close ties to the military.
However, over the last year Palantir has been emerging as a frontrunner in the AI revolution. This is largely thanks to some initial applause following the release of its fourth major product: the Palantir Artificial Intelligence Platform (AIP). AIP's success is helping change the narrative around Palantir, and more Wall Street personalities are beginning to sound the alarm on the company's software chops.
Dan Ives of Wedbush Securities recently took to social media to proclaim that Palantir AIP is the "launching pad of AI use cases." His latest research report places a price target of $35 on Palantir stock -- implying 36% upside as of market close on March 11.
Let's dig into how Palantir is winning over customers, and break down how its software is becoming increasingly deployed across the AI realm.
How Palantir is winning in AI
Following the release of AIP last April, Palantir began employing a pretty unique approach to marketing the product. The company started hosting immersive seminars called "boot camps" during which prospective customers can test and demo Palantir's various platforms and identify how its software can play a role in their AI ambitions.
This lead generation strategy has proven successful so far. In 2023, Palantir conducted over 500 boot camps and increased its customer count by 35%. The rapid adoption of AIP and its role in converting leads to paid customers has helped fuel margin expansion and consistent cash-flow generation for Palantir.
In an environment that is densely populated with deep-pocketed competitors such as Microsoft and Amazon, Palantir is showing no signs of slowing down.
Image source: Getty Images.
Use cases are exploding
Last week Palantir hosted AIP Con 3. During this event, new customers joined Palantir's executive leadership and showcased how its software is being used.
Here are some of the featured use cases for Palantir across companies in many different industries:
- Lennar is using Palantir to help streamline its land development bidding process.
- General Mills is leveraging Palantir for its logistics and supply chain efforts.
- Cathie Wood favorite Archer Aviation is using Palantir to help with maintenance and flight routing protocols.
- Lowe's is deploying Palantir to assist with work queues and agent satisfaction.
Should you invest in Palantir stock?
Given its milestone performance in 2023, investors rewarded Palantir stock and shares surged by 167% last year. So far this year, the euphoria surrounding the overall AI narrative has helped propel Palantir stock another 45%.
Unsurprisingly, this buying activity has extended Palantir's valuation multiples. As such, shares are trading at a noticeable premium to other software-as-a-service (SaaS) peers.
Palantir is moving at a fast pace as it looks to outmaneuver big tech. Moreover, with $3.7 billion in cash and no debt on the balance sheet, combined with consistent profits, Palantir is in a strong financial position relative to many other money-burning software developers.
What makes the list of use cases above so encouraging is the variety of applications that Palantir represents. Companies of varying sizes and in all different industries are using the technology.
Now, as boot camps drive accelerated conversion of leads into paying customers, Palantir has a first-mover advantage with all of these new accounts as it pertains to their AI roadmaps. This provides the company with a lucrative opportunity to work alongside its customers and help identify new use cases and expand across the organization over time.
This dynamic validates Ives' stance. AIP is merely serving as a launchpad as Palantir continues to penetrate the market for new customers and expand within its existing base. Despite the recent surge in the stock, I think now is as good a time as ever to use dollar-cost averaging and scoop up some shares in Palantir.
