Palantir (PLTR) is a premiere AI contractor for the U.S. government, giving the company huge opportunities going forward. Moreover, Palantir’s government contracting and private-sector businesses are both growing very quickly.
As a result of these positive attributes, Palantir stock could continue to rally going forward, even though the shares’ valuation is quite high.
Palantir’s AIP Offering
The company’s Artificial Intelligence Platform (AIP) enables government agencies and companies to utilize AI in order to make decisions. According to Palantir, AIP, in conjunction with two of the firm’s other products, allows its customers to effectively exploit all types of AI-driven products. Among the systems in the latter category are web applications that feature large language models and localized AI.
Washington Is a Big Fan of Palantir and Its AI Capabilities
In May, the U.S. Army gave the company a $480 million contract to further develop Project Maven. Described as the Pentagon’s ”most visible” AI offering, Maven allows the Army to utilize data from multiple sources in order to automatically obtain possible military targets. The U.S. has used the system in the Middle East in 2024.
Indicating that the Pentagon was pleased with Palantir’s work, the agency in September decided to award the company an additional $100 million contract. Under the terms of the latest deal, the firm is charged with providing more members of the military with access to Maven.
And ARPA-H, housed within the Department of Health and Human Services, in June awarded Palantir a $19 million deal. ARPA-H will use Palantir’s AI and data offering tools to “rapidly collect, synthesize, analyze, and make decisions from a range of data sources.”
Washington is reportedly poised to inject AI into every agency. Consequently, the fact that the government obviously greatly appreciates Palantir’s prowess when it comes to handling AI bodes well for its outlook.
Palantir’s revenue from the U.S. government increased by an extremely impressive 40% last quarter versus the same period a year earlier to $320 million.
Strong Commercial and Overall Results
In the third quarter, Palantir’s revenue from U.S. companies, which it refers to as U.S. commercial revenue, soared 54% year-over-year to $179 million.
The company’s overall sales increased 30% YOY to $726 million. And Palantir’s operating income jumped to $113 million versus $40 million in Q3 of 2023.
Bank of America Is Bullish on Palantir
On Nov. 26, Bank of America hiked its price target on PLTR stock to $75 from $55. According to the bank, Palantir’s quickness and creativity will help it to become a winner. What’s more, Bank of America contended that the company is “poised to dominate” amid increased spending by firms on AI and software.
As of the afternoon of December 4, Palantir’s shares were changing hands for around $68.
Valuation and the Bottom Line on PLTR Stock
As of the afternoon of December 4, Palantir had a huge forward price-earnings ratio of 151 times.
But the company’s products and services are obviously quite popular among both government agencies and companies. Consequently, its shares could very well trend significantly higher over the longer term.
