got behind Palantir (NASDAQ:PLTR) stock overnight, giving shares in the government contractor a small boost.
Palantir stock opened this morning at $16.40 per share, bringing the company’s market capitalization to about $35 billion. Palantir reported revenue of $1.9 billion last year. The shares are up 161% in 2023, with nearly all that gain coming in the last two months from artificial intelligence (AI) hype.
Cramer called the stock a “buy” on his “lightning round” segment.
War Games
Palantir isn’t selling the kind of generative AI that draws pictures or tells stories. It’s selling a proprietary database product that can analyze military data. In the words of co-founder Peter Thiel, it
Palantir’s success story is . The company’s software is helping . It is allowing Ukraine to efficiently retake territory against entrenched Russian defenses with minimal casualties.
Its work there has brought a renewal of U.S. military contracts
. While software prices usually decline as usage accelerates, Palantir’s prices are rising.
This is not yet showing up in analyst estimates. The company is expected to earn just 5 cents/share for the second quarter, 21 cents for the whole year. Revenue growth should accelerate, but in 2024.
Faster growth will demand commercial success. Palantir launched its on Amazon’s (NASDAQ:AMZN) AWS cloud this month. The software claims to let companies plug their data into the system and get quick recommendations for improving productivity.
PLTR Stock: The Bottom Line
There are few places where investors hungry for AI profits can go right now. Palantir is delivering profits on what it calls an AI platform, so it’s a natural winner.
But as more companies win at AI, expect Palantir to trade more like a defense contractor. Conflict assures that it will be a good holding. Just maybe not at 18 times revenue.
As of this writing, Dana Blankenhorn held a LONG position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
