Palantir Technologies (NYSE:PLTR) stock has experienced some slight turbulence recently. Valuation and growth concerns have scared fair weather investors out of leading many AI stocks. However, with the skittish leaving, and the market’s concerns about this fast growing sector easing, things are looking up for this AI software winner.
The next big win could be in less than two weeks. Q1 results for Palantir will be reported post-market on May 6. The company is expected to impress the market with results and outlook revisions. Consider buying during this recent weakness, as it may not last.
Palantir Stock: Finding Support at $20 Per Share
Back in early March, PLTR climbed to $27.50 per share. That was a price level not hit since this enterprise software provider’s first heyday during the 2021 runaway bull market.
Yet at the same time Palantir stock was climbing back to prior price levels, bullishness was not universal. A growing number of bearish analysts and commentators began to argue that PLTR was becoming a “priced for perfection” situation following this surge. Initially, enthusiasm for the gen AI growth trend helped to counter this bear case.
But then, started weighing on the broad market, and in particular on tech stocks. Fearful and fair weather investors in this space quickly exited positions in richly priced names in the sector, including Palantir.
However, the overly valuation-conscious have now made their exit. The stock has found support at just over $20 per share.
Yes, even at $20 per share, PLTR remains pricey. Shares trade for 63.8 times forward earnings. Even so, in our view not only is this valuation sustainable.
Takeaways from the upcoming quarterly earnings release may provide the justification to send shares toward higher price levels once again.
Why Earnings Could Kick PLTR Back into High Gear
Heading into earnings, the sell-side’s expectations run high. According to Seeking Alpha, all seven Wall Street analysts covering Palantir stock have over the past 90 days. Oftentimes upwardly revised forecasts can pave the way for big disappointment, when actual results come in.
When it comes to Palantir’s results last quarter though, that’s a big assumption to make. The company has achieved big success right out of the gate with its Artificial Intelligence Platform (AIP). As we’ve pointed out previously, AIP resulted in strong commercial sales growth during Q4 2023.
Moreover, customer count, a leading indicator, rose to an even greater extent than commercial revenue growth (55% versus 32%) during that time frame. That’s not to say commercial sales growth will come in at 55% for Q1, but it does strongly suggest growth re-acceleration is a strong possibility.
If Palantir delivers an earnings beat, as well as reiterate bullish outlook for the rest of 2024, PLTR could end up having another runaway post-earnings rally, following the last quarterly earnings release. Beyond the potential for a rapid rebound for shares, don’t forget the other catalysts in play that could drive even more significant price appreciation.
The Verdict: A Can’t Miss Buy for the Near and Long-Term
As we have also pointed out recently, there are two long-term catalysts that stand to send PLTR to a new all-time high, well above the stock’s past high-water mark. First, the company’s new partnership with Oracle (NASDAQ:ORCL). Teaming up with the software giant could provide a further boost to commercial demand.
Second, spiking geopolitical tensions could mean a growth resurgence ahead for Palantir’s legacy governmental business. This segment has experienced a growth slowdown in recent years, but as global conflicts intensify, there may soon be even stronger demand from the U.S. and its Western allies for the company’s data analytics and cyberdefense software platforms.
Taking into account these longer-term catalysts, alongside the upcoming earnings catalyst, Palantir stock is a can’t miss opportunity at current prices, so buy in at current levels, while you still can.
Palantir stock earns an A rating in Portfolio Grader.
On the date of publication, Louis Navellier had a long position in PLTR. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The 香港六合彩玄机 Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
