Palantir (PLTR) stock soared more than 25% Tuesday morning as investors cheered the defense software maker’s latest artificial intelligence advancements.
“I’ve never before seen the level of customer enthusiasm and demand that we are currently seeing from [artificial intelligence platforms] in US commercial,” Palantir CFO Ryan Taylor told investors during the company’s earnings call on Monday night.
The software company’s Artificial Intelligence Platform, or AIP, was mentioned nearly 50 times throughout the call. And according to Palantir, it’s a key reason it expects US commercial revenue to grow nearly 40% in 2024.
It’s also the reason the stock surged more than 100% over the past year, as AI euphoria sent many tech stocks roaring. Amid calls that Denver-based Palantir’s stock was already overvalued, Tuesday’s market action is the latest sign that investors haven’t had enough of the AI trade — even if Wall Street believes parts of the trade have extended beyond any fundamental backing.
“We are incredibly bullish on Palantir,” Morningstar equity analyst Malik Ahmed Khan told Yahoo Finance Live. “If you look at our forecasts you would see us being above consensus on profitability, on revenue, etc.”
“At the same time,” he added, “we can not rationalize Palantir’s current valuation in the base case.”
Jefferies equity analyst Brent Thill, who entered the earnings report with a sell rating on Palantir, conceded in a research note after the release that the AIP growth is exceeding expectations. But even after upgrading the stock to a Hold rating, Thill still warned about the cost of the stock.
“The biggest concern is valuation with [the] stock trading at a 23% premium to the large cap average,” Thill wrote.