Chicago, IL – February 6, 2025 – Today, Zacks Investment Ideas feature highlights Palantir PLTR, Meta Platforms Inc. META, Microsoft Corp. MSFT and Alphabet Inc. GOOGL.
Palantir, the artificial intelligence (AI)-powered software platform and data analytics firm, reported robust earnings results for fourth-quarter 2024. The company’s earnings results can be divided into three parts: strong business execution in the fourth quarter, an impressive guidance for 2025 and a tactical shift in revenues from government to commercial businesses.
Palantir Technologies builds and deploys software platforms for the intelligence community to assist in counterterrorism investigations and operations in the United States, the United Kingdom, and internationally. The U.S. defense sector is the major customer of PLTR.
Palantir Technologies came up with quarterly earnings of $0.14 per share, beating the Zacks Consensus Estimate of $0.11. This compares to earnings of $0.08 per share a year ago. These figures are adjusted for non-recurring items.
PLTR posted quarterly revenues of $827.52 million, surpassing the Zacks Consensus Estimate by 6.44%. This compares to year-ago revenues of $608.35 million. U.S. commercial revenue grew 64% from a year ago to $214 million, while U.S. government revenues rose 45% year over year to $343 million.
Total customer count increased 43%, in which, U.S. commercial customer count jumped 73%. U.S. commercial total contract value (TCV) deals closed skyrocketed 134% and U.S. commercial remaining deal value soared 99% to $1.8 billion.
Palantir Technologies forecast first-quarter 2025 revenues to range from $858 million to $862 million. Its mid-point of $860 million is well above the current Zacks Consensus Estimate of $798 million. The Zacks Consensus Estimate for first-quarter EPS is currently pegged at $0.11, indicating an improvement of 37.5% year over year.
PLTR expects 2025 total revenues in the range of $3.741 to $3.757 billion. Its mid-point of $3.75 million exceeds the current Zacks Consensus Estimate of $3.54 billion. U.S. Commercial revenues are expected to climb 54% year over year, surpassing $1.08 billion. The Zacks Consensus Estimate for 2025 EPS is currently pegged at $0.48, reflecting an improvement of 17.1% year over year.
Lately, Palantir Technologies’ commercial business has gathered pace besides its traditional government contracts. This is primarily due to PLTR’s aggressive venture in the AI space. In 2023, PLTR launched its Artificial Intelligence Platform (AIP), an AI-powered system that helps customers quickly concentrate and analyze data and discover how it can help advance their business goals.
AIP provides unified access to open-source, self-hosted, and commercial large language models that can transform structured and unstructured data into LLM-understandable objects and turn organizations’ actions and processes into tools for humans and LLM-driven agents. This shift in revenue structure has enabled the company to no longer depend on government defense agencies.
Consequently, on Feb 4, the stock price of PLTR jumped 24% to close at $103.83 after touching an all-time high of $106.91.
PLTR’s data analytics software is utilized by government agencies for intelligence gathering, counterterrorism and military purposes. This tool, in association with generative AI applications, is expanding significantly in the health care, energy and manufacturing sectors.
In fourth-quarter 2024, Palantir Technologies inked 129 deals worth at least $1 million. Of those, 58 were worth at least $5 million, and 32 were worth at least $10 million. PLTR’s remaining performance obligation (RPO) — sales not yet booked as revenues — climbed 40% year over year to $1.73 billion.
The generative AI market has huge potential. Consulting firm McKinsey & Company estimated this market size to reach $2.6 to $4.4 trillion in the coming decades. Bloomberg Intelligence estimates that generative AI spending will increase from $67 billion in 2023 to $1.3 trillion by 2032.
After fourth-quarter earnings results, global AI-application behemoths like Meta Platforms Inc., Microsoft Corp. and Alphabet Inc. reaffirmed their massive expenditures on gen AI.
In the past year, the stock price has soared more than 500%. Despite its overstretched valuation, the stock has significant potential for the long term. The long-term (3-5 years) EPS growth projection is 36.1%, highly above the S&P 500’s growth rate of 12.4%. Therefore, every meaningful (3-5%) dip in stock price should be an attractive entry point.
Palantir Technologies currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Its favorable Zacks Rank along with robust fourth-quarter earnings results, should also drive its stock price in the near future.
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