Palantir Earnings Due Nov. 4. Will AI Growth Make Palantir Stock A Buy Or Sell?

There's plenty for bulls and bears to hash out over Palantir Technologies (PLTR). Bulls point to improved profitability for PLTR stock. Bears focus on whether revenue growth will reaccelerate for Palantir stock. Then, there's buzz over artificial intelligence stocks to consider for the maker of data analytics software.

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Third quarter earnings for Palantir stock are due Nov. 4. Wall Street analysts project 29% EPS growth to 9 cents, with revenue climbing 26% to $703.4 million.

Also, PLTR stock has advanced 153% in 2024. Shares closed at an all-time high of 43.52 on Oct. 10 (PLTR stock set an all-time intraday high of 45 in late January 2021).

Analysts with bearish views on Palantir stock continue to question its valuation.

However, IBD doesn't put much weight on P/E ratios and other valuation metrics. On the other hand, here are some time-tested trading rules.

And, Palantir stock ranks No. 7 on the IBD 50 roster of growth stocks. In addition, Palantir is among AI stocks to watch.

Meanwhile, PLTR stock has out-performed other software companies. The iShares Expanded Tech-Software Sector ETF (IGV), an industry index that includes Microsoft (MSFT) and many big-cap software companies, has gained nearly 14% in 2024.

Palantir Stock Joins S&P 500

Meanwhile, Palantir joined the S&P 500 index on Sept. 23. The inclusion enables mutual funs and institutional investors to buy PLTR stock.

Palantir has already mined the AI opportunity with government customers for intelligence gathering, counterterrorism and military purposes. Now Palantir aims to use generative AI to spur growth in the commercial market.

The company continues to make progress with its "Artificial Intelligence Platform," initially rolled out in early 2023. Palantir hosted its fifth AIP event in September.

At AIPCon 5, clients such as the National Geospatial-Intelligence Agency, Aramark, and Mount Sinai demonstrated Palantir AI technologies in better supply chain management, operational efficiencies and health patient care.

Palantir Stock: AI Product Ramp

"We tuned into AIPCon 5, the fifth installment of Palantir's conference series on AIP in the last 12 months," said Jefferies analyst Brent Thill in a report. "Over 100 organizations demonstrated and spoke publicly about their work for the first time, including industry verticals in railroad manufacture, automobile supply, government defense and healthcare. Go-to-market momentum is accelerating, but valuation at 24 times 2025 estimated revenue makes PLTR the most expensive stock in our software coverage."

However, Palantir has not disclosed pricing for AI products. Some analysts say Palantir needs to show more revenue progress with generative AI commercial deployments.

Further, Palantir in August hired Mike Gallagher, a former Wisconsin congressman, as head of its defense business.

Meanwhile, Q2 earnings for Palantir stock topped expectations.

In a rare interview, Palantir Chief Executive Alex Karp talked about AI, America's future and other topics.

PLTR Stock: Project Maven Extended

Still, Wall Street analysts now do not expect software makers to monetize generative AI, or "conversational AI,"  in a material way until 2025. Here's a look at the enterprise AI market.

Meanwhile, the U.S. Army on May 29 announced that it has extended Palantir's existing Maven Smart System (MSS) contract for five years. Palantir was one of the early contractors for Project Maven, launched in 2017.

Project Maven is part of the U.S. Army's effort to bring artificial intelligence to the battlefield. The Maven contract brings in about $90 million annually, one analyst estimated.

Also, Palantir announced that the Department of Defense Chief Digital and Artificial Intelligence Office (CDAO) awarded a contract that could be worth $480 million over a 5-year period

On the news front, there's plenty for investors to mull. Oracle (ORCL) and Palantir announced a cloud computing alliance.

In addition, Palantir has won a new, $178 million U.S. Army contract for project TITAN, a battlefield system using artificial intelligence.

Meanwhile, here's a look at Palantir's international business, including how AI is doing in Europe.

Also, Palantir stock jumped 167% in 2023. The Nasdaq composite climbed 43% while the S&P 500 rose 24%.

PLTR Stock Fundamentals

The Denver-based company offers three platforms. One is Palantir Gotham, used primarily by government agencies. There's Palantir Metropolis for banks, financial services firms and hedge funds. And Palantir Foundry is used by corporate clients.

Palantir gets nearly 60% of its revenue from government agencies. Decelerating revenue growth is an issue. In 2022, revenue growth slowed to 24% from 40% in 2021 and 47% in 2020. In 2023, revenue grew 17% year-over-year to $2.23 billion.

Palantir Stock Technical Analysis

Meanwhile, Palantir's Relative Strength Rating stands at 98 out of a best-possible 99.

Also, Palantir stock holds a Composite Rating of 99 out of a best-possible 99, according to IBD Stock Check-up.

IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

PLTR stock holds an Accumulation/Distribution Rating of A. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.

As of Oct. 25, Palantir holds an entry point of 29.83, according to MarketSurge. Also, Palantir stock trades well above a 5% buy zone.

Some investors may want to take profits.

Investors can sign up for news alerts from Palantir investor relations department here.

Further, check out IBD Stock Lists and other IBD content to find dozens more of the best stocks to buy or watch.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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