AI adoption could shake up the movement of the economy, but for Palantir, it's the other way around as the shares of the company improved in the latest pre-market trading.
The surge is a positive indicator of growing investor confidence, supporting the fact that higher demand for AI solutions boosts the growth of Palantir.
AI Fuels Palantir's Expansion
Palantir has rapidly become a generative AI leader, whose stock has at least doubled more than two times in the last year. But this growth spooked a few investors who say that the company is overpriced, Bloomberg report says.
These tasks include testing and debugging code, as well as even analyzing AI-related scenarios. Other than the commercial uses, the company's software also serves government clients by providing necessary data visualization tools to be used by its military and defense purposes.
As Dan Coatsworth, an investment analyst at AJ Bell, noted: "Many businesses now seek to analyze data in a bid to make faster and better decisions; AI is the basis of this work, and Palantir is quite expert in data analysis.
Palantir's Revise Revenue Forecast for 2024
The company has raised its revenue forecast for 2024 based on recent performance. Instead of a previous range of $2.742 billion to $2.750 billion, the company is now estimating a range of $2.805 billion to $2.809 billion. It means the growth rate must be solid and less volatile.
Reuters reports that there appears to be healthy growth as far as the third-quarter revenues are concerned in Palantir's core business areas, with its U.S. government contracts experiencing tremendous growth at 40%, which on its own counted for more than 44% of Palantir's total revenue that amassed to $725.5 million.
Commercial revenue similarly grew 54%, hinting that the company expanded into the private sector trying to minimize its dependence on governments for contracts.
Growing Revenues in the Commercial Category
Palantir's rapid growth in the commercial sector is highly profitable. Coatsworth said that the growth has proven to be a fruitful opportunity in the commercial sector.
The sector has been one of the key focuses for Palantir as it widens its customer base and molds its services to cater to the various needs of businesses that are seeking more sophisticated data analytics solutions.
However, the stratospheric surge in the stock value of Palantir already makes the industry analysts an early warning system. To research analysts of Morningstar, this company would be quite vulnerable to this high valuation. If it happens so that revenue growth does not make much of the speed as desired, and if at all sales execution gets jolted then its value would suffer.
Effect of Palantir on the Market
If Palantir sustains its premarket gains during the trading day, the company could add about $13.8 billion to its market value, an impact on the investor's optimism over the company's potential in this AI-driven landscape.
From the get-go, Palantir CEO Alex Carp made his stance clear that pausing AI research is a big mistake. He opposed such a call and made it clear that slowing it down wouldn't stop the AI race.
