Would you buy PLTR stock? Here's what technical and fundamental analysis shows for Palantir stock

There is a lot for bulls and bears to hash Palantir Technologies (PLTR). The bulls indicate improved profitability for PLTR stock. Bears focus on slowing revenue growth. Then there’s the buzz about AI stocks to consider.

Palantir’s stock fell on its second-quarter earnings report. Quarterly earnings and sales are in line with analyst estimates. But management’s expectations for PLTR stock disappointed some investors. The company also announced a $1 billion buyback of PLTR stock.

PLTR stock hit a 52-week high on Aug. 1 as AI shares extended their rally. Palantir stock jumped 140% in 2023. Shares are down 24% from their 52-week highs.

In addition, shares are still trading well below the software maker’s intraday high of 45 in late January 2021.

Artificial intelligence engine of growth?

PLTR stock bulls point to artificial intelligence software as a growth engine. Palantir has already exploited the AI opportunity with government customers for intelligence gathering, counterterrorism, and military purposes.

Will Generative AI Spur Growth in the Commercial Market for PLTR Stocks? The software maker has expanded into healthcare, energy, and manufacturing.

In healthcare, Palantir customers can use generative AI in applications such as drug discovery. Palantir announced its latest offering, an “artificial intelligence platform,” earlier this year.

Blantyre said on a second-quarter earnings call with analysts. Palantir noted that more than 100 organizations are using its new AI platform. Palantir has not disclosed pricing for its AI products.

“Plantyre’s primary goal is to drive usage and education, with the goal of later monetization,” Goldman Sachs analyst Gabriella Borges said in a note to clients.

PLTR Stock: The Basics

Meanwhile, Palantir’s governance structure gives Karp and co-founder Peter Thiel long-term control of the company through superior voting rights.

The company’s name is derived from Palantiri, a crystal ball similar to the “vision stones” from the “Lord of the Rings” book and movie series. Palantir means “one who sees from afar”.

In addition, Palantir engineers often customize software according to customer needs. This extends the time needed to intensify “digital transformation” projects. So after Palantir wins the contract, it may take some time to generate revenue.

The Denver-based company offers three platforms. One of them is Palantir Gotham, and it is primarily used by government agencies. There is a Palantir Metropolis for banks, financial services companies and hedge funds. Palantir Foundry is used by corporate clients.

Palantir gets approximately 60% of its revenue from government agencies. Slowing revenue growth is a problem. In 2022, revenue growth slowed to 24% from 40% in 2021 and 47% in 2020.

Earnings for the June quarter were 5 cents a share on an adjusted basis. This was in line with analyst expectations, and up from a loss of 1 cent in the previous year.

Revenue rose 13% to $533 million. This also achieved the goals of Wall Street. Income included investments in special purpose acquisition companies.

Denver-based Palantir said revenue for government customers jumped 15% to $302 million, in line with estimates. Commercial customer revenue increased 10% to $232 million.

Moreover, Palantir has been profitable using generally accepted accounting principles, or GAAP, for three consecutive quarters.

The company’s forecasts for the third quarter and fiscal year 2023 revenue are roughly in line with expectations.

Palantir Partnerships

In November 2022, Palantir acquired full ownership of a joint venture in Japan that sells the company’s software. Japanese insurance company Sompo Holdings is the largest customer.

Then in 2023, Palantir began incorporating revenue from the joint venture into its earnings reports. Additionally, a Morgan Stanley report estimates that the project has generated an annual run rate of revenue of $50 million heading into 2023.

Moreover, Palantir recently expanded its cloud computing partnership with Microsoft (MSFT) targeting government agencies.

To accelerate corporate adoption of AI software, Palantir and IBM have formed a global partnership. Under the deal, Palantir has made its Foundry software available to IBM’s cloud computing clients. The Foundry platform is a centralized data operating system that allows users to manage, filter, and visualize large data sets.

One problem with PLTR stock is that large US government contracts are up for renewal.

Also, one key card is whether Palantir wins more contracts in the UK from its NHS. I used the NHS Palantir during the coronavirus emergency. But an even bigger contract worth 400 million euros, or roughly $426.6 million, is now up for grabs.

Palantir stock technical analysis

Palantir’s stock relative strength rating stands at 98 out of a possible 99. Also, PLTR stock carries a composite IBD rating of 97 out of the best 99 possible, according to IBD stock check.

Meanwhile, IBD’s composite rating combines five separate property ratings into one easy-to-use rating. Also, the best growth stocks have a composite rating of 90 or better.

Furthermore, PLTR stock has an accumulation/distribution rating of C, down from A-min two weeks ago. This rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ indicates a major institutional buy; E stands for oversold. Think of a C grade as neutral..