NYSE title Palantir stock facing a gigantic bull run? That’s why Cathie Wood is increasing her stake in AI stock Palantir

• Wood takes advantage of price weakness and increases her stake in Palantir
• Palantir has recently been able to significantly increase sales
• Plantir CEO exudes great AI optimism

Since its IPO in September 2020, Palantir stock has experienced tremendous turbulence. While things went downhill rapidly in 2022, the data analysis company’s shares made a strong comeback in 2023. Since the beginning of January, Palantir shares have gained a whopping 172.12 percent in value at a current price of $17.47, thus performing many times better than the broader US market as a whole (as of December 27, 2023 ). Things could continue to rise in the new year 2024 – at least tech investor Cathie Wood seems to think so.

Wood increases Palantir stake

For example, Cathie Wood’s flagship fund ARK Innovation ETF significantly increased its Palantir position by purchasing 1.2 million additional shares on December 6th. The ARK Innovation ETF thus doubled its stake in the company. This move by the fund followed previous purchases of 525,000 shares in August and around 745,000 shares in September. Wood also bought hundreds of thousands of Palantir shares for the ARK Next Generation Internet ETF and the ARK Fintech Innovation ETF. In total, they bought 1.57 million more Palantir shares.

After the courageous purchase, ARK Invest’s various ETFs now have a total of 9.89 million Palantir shares, as “Investorplace” writes – previously there were 8.35 million papers from the big data company in the ARK Invest depots. Despite the position expansion, Palantir was only the 23rd largest position in the flagship ETF ARK Innovation as of December 22nd, with a weighting of 1.49 percent. For comparison: The three largest ARK Innovation holdings Coinbase (10.71 percent), Tesla (7.48 percent) and UiPath (7.25 percent) were significantly more prominently represented in the portfolio.

Wood takes advantage of Palantir share price weakness after negative analyst comments

Wood’s latest purchase coincided with a downturn in Palantir’s shares, which had temporarily lost more than 12 percent in value in December. These price losses were partly due to profit-taking. Negative analyst comments certainly also contributed to the temporary bear market. For example, one such comment came from William Blair analyst Louie DiPalma, who pointed out that the US Army’s extension of the four-year, $458 million contract with Palantir signed in December 2019 could see a reduction. DiPalma pointed to the new contract’s potential downsizing to $116 million, according to The Motley Fool. This contract now extends over two years, with the likelihood that other providers will share the work.

Palantir reported strong quarterly results

In general, Palantir’s business figures are very good, as the US company has recently recorded strong growth. For the third quarter of 2023, Palantir posted earnings per share of $0.07. The data analysis company not only exceeded analysts’ estimates, which averaged $0.057 per share, but also the previous year’s figure ($0.01 per share). Palantir’s sales of $558 million were also better than expected ($555 million). In the same quarter last year, Palantir had lower revenues of $477.9 million. Investors reacted extremely happily to the figures presented and diligently stocked up on Palantir shares. On the first day of trading after the annual report, Palantir shares closed up a whopping 18 percent.

Non-governmental commercial business is becoming increasingly important for Palantir

Although Palantir currently derives 55 percent of its revenue from government contracts, its commercial revenue is growing rapidly. In the third quarter, the company reported a 23 percent year-over-year increase in commercial revenue to $251 million, outpacing the 12 percent growth in government contract revenue. Additionally, the company reported a 45 percent year-over-year increase in commercial customers in the most recent quarter, outpacing overall customer growth of 34 percent. The growth of the commercial customer base appears to be closely linked to the use of artificial intelligence (AI), particularly the strong demand for the AI ​​platform Palantir Artificial Intelligence Platform (AIP), which was launched in May 2023.

Palantir CEO is pleased about high demand for AI

Given the strong numbers, it’s understandable that Palantir CEO Alex Karp is sounding confident. In his most recent letter to shareholders, Karp wrote: “The renewed acceleration of growth in our U.S. commercial business, the new and emerging center of our company, is fueled by growing demand for our new artificial intelligence platform (AIP), which has just been announced “was published a few months ago,” as “The Motley Fool” quotes from Karp’s letter to shareholders. The Palantir boss added that “companies across all industries in the United States are seeking to deploy software platforms that allow them to harness the power of the latest major language models.” The Palantir AIP is already used in numerous industries, from healthcare to retail to electronics. According to Palantir, the number of AIP users nearly tripled in the third quarter.

Palantir Stock: Analysts Disagree

However, the opinions of Wall Street analysts vary widely when it comes to Palantir papers: According to “TipRanks”, four analysts are currently recommending a buy, four analysts are recommending a hold and five analysts are recommending a sell. The average Palantir price target for the next twelve months is $13.40. The most optimistic observer thinks $21 is possible, while the lowest price target is just $5.00 (as of December 27, 2023).

Morgan Stanley analyst Keith Weiss is clearly in the Palantir bear camp. Weiss is of the opinion that the Palantir share price has now priced in an excess of optimism about the potential in connection with the topic of artificial intelligence. There is also the risk that business with governments will not be able to prevent a decline in sales momentum. However, a number of investors – like Cathie Wood – seem to view Palantir’s prospects very differently than Weiss. Palantir’s annual reports will make it clear in the coming years who will ultimately be right.

Editorial team finanzen.net

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