Palantir Technologies (PLTR 12.15%) has been one of the most-watched stocks during the artificial intelligence (AI) boom. The company makes software, including an AI-driven platform, that helps customers make better use of their data. Quarter after quarter, demand has soared, resulting in impressive earnings growth and stock performance.
And just this week, during its latest earnings report, Palantir delivered two key messages that you shouldn't ignore. They set the tone for what happens next in terms of growth.
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Palantir's recent growth
Before diving in, let's take a quick look at Palantir's path so far. The company has been around for more than 20 years, but it only started experiencing its big growth stage in recent years. Palantir launched its Artificial Intelligence Platform (AIP) more than two years ago, allowing customers to apply the power of AI to their needs.
The company's systems, including AIP, aggregate and analyze a customer's data -- then help that customer put the data to work. This can result in new processes and strategies or even pave the way to innovation. Palantir's customers include governments and commercial players, and these days, a good deal of this business is for the U.S. government and U.S. businesses.
Demand for AI products and services in general has been high, as we've heard from many tech companies such as chip designers and cloud service providers -- so it's easy to see why AIP, a platform that allows customers to immediately put AI to work for them, has taken off. It's helped the company's revenue soar in the double digits quarter after quarter and pushed profit to a record of $609 million in this recent quarter.
NASDAQ: PLTR
Key Data Points
What customers are doing
Now, let's consider the two key messages from Palantir that offer us a glimpse of what's to come. The first is this: Current customers are expanding their deals at a faster rate, and their deal values are growing. Palantir offered examples, and here's one: A utility company increased its annual contract value of $7 million in the first quarter of last year to $31 million by the end of the year.
The second message is the following: New customers are starting off with large deal sizes. For example, a healthcare company tested Palantir's service in the summer and signed a $96 million contract later in the year.
These two trends are important because they show that customers aren't just using Palantir once and then moving on. They're seeing value in AIP and committing to expanded work with the platform. This sets a positive tone for what's to come, suggesting that Palantir's growth story is far from over -- and that's fantastic news for long-term investors.
