Palantir Technologies Inc. has seen its stock surge by 22% after reporting outstanding fourth-quarter results for 2024, reinforcing investor confidence and excitement surrounding its role in the artificial intelligence (AI) and defense technology sectors. Following the release of its financial results on Monday evening, Palantir’s stock price soared, reflecting its substantial market value growth of over $150 billion throughout the past year.
The Denver-based tech firm, co-founded by Peter Thiel and Joe Lonsdale, has experienced remarkable performance with shares increasing approximately 340% over the year. Investors are betting on Palantir's ability to effectively leverage AI technologies within both governmental and commercial frameworks.
According to the company’s earnings report, Palantir delivered adjusted earnings per share (EPS) of 14 cents, outperforming analysts’ expectations of 11 cents. Revenue figures for the quarter reached $828 million, exceeding Wall Street forecasts of around $776 million, representing growth of 36% compared to $608.4 million just one year earlier.
U.S. commercial revenue, part of Palantir's broader business sectors, saw significant increases of 64% year-over-year, totaling $214 million. Meanwhile, government revenue also performed strongly, rising 45% to $343 million. Together, these segments contributed to Palantir's overall revenue growth, which CEO Alex Karp characterized as being part of the “earliest stages” of myriads of opportunities within the AI space.
"We are still in the earliest stages, the beginning of the first act, of a revolution... A software juggernaut has emerged," CEO Alex Karp remarked, illustrating the transformative potential he sees for the company.
Looking forward, Palantir has provided ambitious guidance for the first quarter of 2025, expecting revenue between $858 million and $862 million, comfortably above analysts’ previous estimates. This guidance is underpinned by continued commercial growth; the company anticipates commercial revenue for the entire calendar year 2025 will increase by at least 54%, hitting around $1.08 billion.
Palantir also boasts strong operational metrics, achieving cash from operations of $460 million, which is up 53% from last year. The company’s cash, cash equivalents, and short-term investments rose to $5.2 billion, marking a staggering 44% increase year-over-year.
Notably, Palantir's success has prompted various analysts to adjust their price targets and ratings following the earnings announcement. For example, Mariana Perez Mora from BofA Securities raised her target price from $75 to $90, identifying the company’s continued growth potential as compelling. Dan Ives at Wedbush highlighted Palantir’s standing, likening it to being the “Messi of AI,” capable of achieving monumental growth and possibly even reaching projective market valuations akin to Oracle’s.
A key element of Palantir's focus is its AIP (Artificial Intelligence Platform), which has become integral to its strategy as they pivot from their traditional heavy reliance on government spending. "Instead of trying to have 10,000 clients, all of whom hate you but can't give up your product, we want a smaller number of the world's best partners..." Karp stated. This strategy reveals Palantir’s commitment to building strong relationships within their customer base.
The upcoming administration of President Donald Trump is also expected to provide opportunities for Palantir as AI technology investments intensify within government sectors. Ives remarked on this potential tailwind, indicating favorable conditions for Palantir under new federal spending policies geared toward strategic AI projects.
Although Palantir employs substantial stock-based compensation initiatives (with approximately 48 million stock-appreciation rights converted after the stock surpasses $70 per share), the prospective one-time hit on fourth-quarter earnings estimated around $120 million is not expected to deter investor enthusiasm.
With all these components coalescing, Palantir Technologies stands at the forefront of the AI revolution, paving pathways not only for significant growth but also affirming its place as a powerhouse within both defense and commercial sectors.
Investors' outlook remains tepid yet optimistic, encouraged by strong quarterly results and excited by what the future could hold for this innovative technology firm.