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Palantir Technologies (New York Stock Exchange:PLTR) shares soared Wednesday, rising as much as 12.3% in early trading and remaining up 11% in the afternoon. The momentum continued in Thursday trading, with PLTR stock closing 2.4% higher.
As the hype around artificial intelligence continues to move forward at an endless pace, this momentum at Palantir is clearly tied to the company’s core AI-related business.
Other additional news has also increased interest in Palantir, including the announcement that the company has won a major Army contract worth $178.4 million for 10 Tactical Information Targeting Access Nodes (TITAN) systems. His Palantir track record in providing AI solutions to governments remains strong, with the potential for further contracts.
Palantir stock has increased 187.6% over the past year and 38.7% since the beginning of the year, outperforming the market index. Strong Q4 2023 performance, including 20% revenue growth and profitability, increased investor enthusiasm. Palantir’s upward momentum is likely to continue through its strong AI deployment.
U.S. Army works to develop next-generation targeting system
The company’s recent $178 million contract between Palatir and the U.S. Army to develop the Tactical Intelligent Target Access Node (TITAN) has sparked significant interest from investors. Palantir will build 10 TITAN ground stations to enhance data integration and support advanced targeting for soldiers. Col. Chris Anderson expressed excitement about TITAN’s ability to transform battlefield intelligence following a rigorous evaluation of the system developed by RTX.
Bryant Choung, Palantir’s senior vice president of defense solutions, emphasized the importance of soldier feedback in shaping winning systems. The Army ensured rapid deployment through regular demonstrations and touchpoints with Soldiers, while incorporating Soldier input. Palantir plans to refine the TITAN prototype over the next two years and offer all 10 systems, including an advanced version that integrates space sensor data and a basic version that will be mounted on tactical vehicles.
Choung emphasized a software-focused system design that allows for modular upgrades to meet the Army’s needs. The contract includes the integration of new technologies, with total production to be determined by 2026. Palantir estimates it could potentially procure 100 to 150 systems, working with subcontractors including Northrop Grumman, Anduril Industries, L3Harris, Pacific Defense and Sierra Nevada Corporation. Anduril’s role includes hardware design, development, and scale manufacturing for TITAN.
PLTR stock gets upgrade target
PLTR stock has soared faster than most analysts expected, with Mizuho raising its price target from $18 to $21. But with PLTR stock currently trading around $27 per share, there’s a lot of enthusiasm baked into the stock at the moment.
So some bears are now pointing to concerns about the company’s valuation (although this has been an ongoing issue with profitability for some time). That said, bears have historically been done shorting this stock, given its recent positive profitability and strong growth. I’ve changed my perspective on this (and am glad I didn’t short-circuit this).
Palantir’s rapid growth is driven by small investors, not professionals. Despite analyst warnings and comparisons to meme stocks, there remains optimism. The agreement with TITAN provides a favorable price-to-sales ratio compared to other leading AI companies, raising expectations for further profits. Additionally, Palantir’s AI technology is gaining importance amid global tensions. CEO Alex Karp doesn’t shy away from war stories.
Palantir is Buy but be careful
Investors should focus on the adaptation of Palantir’s enterprise AI system, with implications for inventory management and customer service. In the fourth quarter, this increased his U.S. commercial revenue by 70% and total contract value by 107%. Palantir’s stock price has risen 215% over the past year, making it look expensive by traditional metrics, but its forward price-to-earnings ratio suggests it’s undervalued.
As demand for AI increases, Palantir’s expertise could lead to big profits.
On the date of publication, Chris McDonald did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing Guidelines.
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