Is it sensible to buy a stock after it just went vertical? Sometimes it’s fine, especially with a market leader like cyber-defense and artificial intelligence technology specialist Palantir Technologies (NYSE:PLTR). Our PLTR stock outlook is positive for the long term, but at the same time, too many investors are buying without a plan in place.
When a stock goes down a lot, some people might say it’s “cheap for a reason.” In contrast, we’re assigning Palantir stock a “B” grade and calling it “richly valued for multiple reasons.” The short sellers have been wrong about Palantir Technologies, no doubt, but the buyers need to have a strategy and understand why they’re invested.
PLTR Stock Jumps After ‘Bombastic, Baller’ Results
During the past year, Palantir Technologies has effectively pivoted its primary focus from cybersecurity to AI technology. For instance, the company recently called itself “a leading provider of AI systems to the energy sector,” and indeed, Palantir is demonstrating this by deploying AI software to support Bahrain’s energy sector.
Palantir Technologies’ success in shifting to an AI-tech focus helps to explain why PLTR stock zoomed over 30% higher on Feb. 6. As Palantir released its fourth-quarter and full-year 2023 results, Chief Revenue Officer Ryan Taylor boasted, “I’ve never before seen the level of customer enthusiasm and demand that we are currently seeing from [AI platforms] in U.S. commercial.”
Taylor’s enthusiasm isn’t without merit. Palantir Technologies celebrated its “first profitable year” (2023) as well as five consecutive quarters of GAAP-measured profitability. Palantir’s fourth-quarter 2023 U.S. commercial revenue grew 70% year over year to $131 million.
So, perhaps Palantir Technologies CEO Alex Karp CEO earned the right to use a few unusual adjectives. Specifically, Karp described Palantir’s Q4 2023 commercial business as “bombastic, baller, incomprehensibly good.”
Palantir Technologies Aims High in 2024
Looking ahead, Palantir Technologies guided for current-year adjusted income from operations in a range of $834 million to $850 million. Meanwhile, Wall Street had only forecast $760.3 million.
Karp, as you might expect, remains supremely confident. “Our commercial business is exploding in a way we don’t know how to handle… We don’t know what to do with the onslaught of demand,” the CEO recently said in an interview.
At this point, it might be unwise for investors to share Karp’s level of “bombastic, baller” self-confidence. Palantir Technologies now has to live up to the hype in the coming quarters. That’s easier said than done after a single-day, 30%+ share-price rally.
The message here isn’t that you should sit on the sidelines. Rather, it’s that Palantir Technologies is a well-positioned AI business to consider investing in, but not without due consideration.
Palantir Stock Outlook: Have a Plan
Our PLTR stock outlook calls for higher prices down the road, but the near term is hard to predict. Karp created a lot of hype for Palantir Technologies, and the company is richly valued now.
So, it’s not a bad idea to start small and slowly if you’re building a Palantir stock position now. It’s perfectly fine to just begin with a few shares, and plan to add a few more if the price dips 10%, 20% and 30%. That’s just an example of how you can approach a Palantir Technologies investment with a bullish outlook overall but due consideration in the near term.
On the date of publication, Louis Navellier had a long position in PLTR. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
