Palantir (NYSE:PLTR) just won a $480 million contract to work on an artificial intelligence (AI) called the “Maven Smart System” for the U.S. Army.
The contract is for five years. The aim of Maven is to support intelligence analysts by “fusing data from intelligence, surveillance and reconnaissance systems.”
PLTR stock is up more than 1.5% on the news as of this writing. Shares opened at $21.28 with a market capitalization of over $47 billion. Palantir had revenue of $2.2 billion in 2023.
Back to the Future
While Maven is described as an AI, this news marks a return to Palantir’s original goal of collecting and analyzing large data sets in real-time and delivering answers to queries. It doesn’t replace analysts, just augments their work.
Palantir is up 44% over the last year on the current AI hype. But the firm’s revenue growth has not accelerated much. That’s because it’s mainly a military contractor. Faster growth depends on civilian government contracts and its commercial division.
Back in February, Wedbush raised its price target on PLTR stock to $30 per share after Palantir reported commercial revenue of $284 million, up 32%. Since that post-earnings surge to $25, however, Palantir is down about 20%.
The firm’s May 6 earnings release did not provide a lift. Palantir had year-over-year (YOY) revenue growth of 21% and estimated that full-year revenue will be between $2.67 billion and $2.68 billion, with positive net income.
Palantir remains more popular among small investors and speculators than professionals. On TipRanks, 12 analysts cover the stock and have an average hold rating. Meanwhile, some traders on Stocktwits expect a surge on the new contract, with one claiming Palantir beat Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google AI to win the Maven deal.
I have been on the side of the professionals in this dispute. Palantir offers a proprietary technology and its commercial product, called Foundry, requires extensive setup.
What Happens Next?
My January call on Palantir was wrong, as its February earnings surprised to the upside. Bank of America recently raised its price target on PLTR stock to $28.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
