Until recently, the Palantir (NYSE:PLTR) story dictated that the big data company is too reliant on government work and its services are unsuited for the commercial sector. With last year’s launch of its AIP (artificial intelligence platform), has the company finally addressed that issue?
Wedbush’s 5-star analyst, Daniel Ives, certainly thinks so.
“Our recent checks on Palantir in the field have been incrementally more bullish as we believe the AIP foundation is becoming viewed by many US enterprises as the ‘launching pad of AI use cases,’” Ives opined. “With the AI Revolution now quickly heading towards the key use case and deployment stage, Palantir with its flagship AIP platform and myriad of customer bootcamps is in the sweet spot to monetize a tidal wave of enterprise spend now quickly hitting the shores of the tech sector in our opinion.”
Based on conversations with customers, Ives says they can significantly boost their productivity by utilizing the PLTR suite, creating more opportunities for scaling as efficiencies increase. Backed by a robust product lineup and AI capabilities, Ives anticipates Palantir will claim a substantial portion of the estimated $1 trillion AI Global TAM (total addressable market) as businesses and government entities race to adopt platforms that streamline intricate workflows.
As the company makes further inroads on the commercial side, its government work has also been delivering the goods. Last week, the company nabbed the “landmark” $178 million contract to produce TITAN, the United States Army’s Next-Generation Targeting Node. That could pave the way for a plethora of more government deals over the coming year.
Ives thinks the prospects of growth and the “ultimate re-rating” for the stock rests on Palantir’s US commercial business, which is anticipated to display growth of at least 40% in 2024. The fast-paced growth means FCF could approach $1 billion in 2024, setting Palantir up as a name to play the AI revolution.
“We believe AI is a 1995 moment and this spending wave along with the AIP foundation puts PLTR in prime position to monetize AI demand/use case build outs in 2024 and beyond,” the analyst summed up.
Despite the huge share gains (up by 228% over the past year), Ives considers Palantir an “undiscovered gem,” raising his price target from $30 to a new Street-high of $35. The implication for investors? Upside of 35% from current levels. Unsurprisingly, Ives’ rating stays an Outperform (i.e., Buy). (To watch Ives’ track record, click here)
Ives stands out as the Street’s most bullish advocate for PLTR. While the stock garners an additional 1 Buy rating, 6 Holds, and 5 Sells elsewhere, resulting in a Hold consensus rating. Moreover, the prevailing sentiment suggests the shares are overvalued; with an average target of $19.64, indicating an anticipated 24.5% decline in the coming months.
Ives, however, is by far the Street’s most bullish PLTR advocate. Elsewhere, the stock receives an additional 1 Buy rating, 6 Holds and 5 Sells, resulting in a Hold consensus rating. Moreover, most think PLTR shares are overvalued; at $19.64, the average price target implies the stock will drop 24% over the coming months. (See Palantir stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
