Artificial intelligence (AI) technology has been around for decades, but recent advances have taken these sophisticated algorithms to the next level. Companies of all sizes are attracted to the potential for increased productivity, sparking something of an AI gold rush. Investors recognized an opportunity to profit from this long-term tailwind and bought up shares in companies that stood to benefit from this trend.
Palantir Technologies (NYSE:PLTR) is one such company. The company first gained fame among government agencies for its ability to thwart terrorist plots before they succeed. The company has expanded beyond government contracts to provide data mining and business analysis services for commercial enterprises.
Thanks to our decades of experience in the AI field, Palantir quickly pivoted when generative AI exploded onto the scene. The company has developed an interesting approach to helping customers get the most out of AI, and this strategy is paying off in a big way.
The advent of AI
The adoption of generative AI is accelerating as businesses are constantly looking for ways to improve their bottom line. These AI systems can handle an increasing number of time-consuming tasks in less time, freeing up employees to focus on more important tasks. For example, these systems allow you to:
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Prioritize and summarize email and reply drafts
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Create tables and graphs based on existing data
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Search for data and documents on the Internet or in-house systems
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Draft the original document and suggest revisions
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write and debug computer code
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Create a presentation with some prompts.
While these systems are far from perfect and still require human review, it’s easy to see how these automated systems can save you time. And as the old saying goes, time is money.
unique approach
A diverse workforce means different jobs have different priorities. By identifying the most repetitive and time-consuming tasks, you can tailor your generative AI systems to specific jobs and company needs. That’s what makes Palantir’s approach so great.
The company created an Artificial Intelligence Platform (AIP) to develop generative AI solutions that address real-world business problems. Palantir works with enterprises to identify mission-critical needs and high-value use cases. They then embark on an “immersive hands-on keyboard session.” [that] This allows new and existing customers to build live with Palantir engineers, all working toward the common goal of bringing AI to their operations. This reportedly allows companies to “go from zero to use case in just 1-5 days.” Palantir says: Due to overwhelming demand, the AIP Bootcamp backlog is increasing. ”
Consider this gem from Chief Revenue Officer Ryan Taylor during Palantir’s earnings call last month.
In October, we set a goal to conduct 500 AIP bootcamps in one year. We’re already achieving that goal, completing over 560 bootcamps in 465 organizations to date…Bootcamps dramatically shorten sales cycles and accelerate new customer acquisition We’re already seeing evidence that it’s helping.
That strategy is paying off, as Palantir’s fourth-quarter results demonstrate. U.S. commercial revenue increased 70% year over year and 12% sequentially, driven by strong demand for AIP. Additionally, as we move into 2024, management is guiding this segment to grow. at least 40% — This may be a conservative result.
New high for the first time in 2 years
The stock has soared 240% over the past year, driven by the rapid adoption of AI and excitement over Palantir’s recent blockbuster performance. The company’s valuation has risen as well, with the stock trading at 77 times forward earnings and 17 times expected 2025 earnings. This may seem prohibitively expensive, at least at first glance, but these numbers only tell part of the story.
These metrics do not take into account the company’s accelerating growth trajectory. On the other hand, Palantir’s forward price-to-earnings ratio (PEG), which takes into account Palantir’s multi-year growth outlook, is below 1, the standard for undervalued stocks.
With decades of real-world experience, a strong go-to-market strategy, and strong long-term tailwinds, Palantir has a solid foundation and a clear path forward. I would argue that Palantir stock is a buy, even at two-year highs.
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Danny Vena holds a position at Palantir Technologies. The Motley Fool owns a position in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.
Is Palantir Technologies stock still a buy at near two-year highs?Originally published by The Motley Fool
