July 23, 2024

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Why Palantir Rallied This Week

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Shares of artificial intelligence (AI) software play Palantir (NYSE: PLTR) rose 10.8% this week through 12 p.m. ET Thursday, according to data from S&P Global Market Intelligence.

Although there wasn’t much financial news for Palantir this week, the company did announce two contract wins. Those wins seemed to justify a bullish Wall Street analyst call on Palantir that was published on Monday.

Argus initiates at buy

Palantir certainly got off to a good start this week. On Monday, analyst Joseph Bonner from sell-side research firm Argus Research initiated coverage on the stock with a buy rating.

While Bonner acknowledges that shares do trade at a hefty premium, he’s a believer in Palantir’s differentiation and product improvement on the back of Palantir incorporating more artificial intelligence layers within its software. And while the company’s past has been dominated by high-profile government clients like the Department of Defense and CIA, Bonner sees the high-growth commercial segment as the key to his buy call.

That appears to make a lot of sense, as the company’s commercial revenue grew 27% last quarter, compared with 16% growth in government revenue. Palantir’s U.S. commercial revenue surged an even higher 40%.

Overall commercial revenue has nearly caught up to Palantir’s government revenue, at $299 million and $335 million, respectively, last quarter. But as the commercial segment seems poised to overtake the government segment soon, Bonner’s thesis that Palantir will become more a commercial story appears to carry weight.

On that note, Palantir actually announced two contracts this week, one commercial and one government-oriented. On Thursday, Palantir announced Starlab Space, a U.S.-led joint venture between several international companies for space exploration, had named Palantir as a commercial partner. According to the release, Starlab will use Palantir’s technology to “optimize resource allocation, mission planning, and overall system performance, reducing…

2024-06-20 13:25:45

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