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Shares of Palantir Applied sciences (NASDAQ: PLTR) exploded 27% increased in the present day (4 February). This follows the software program firm’s fourth-quarter earnings, which as soon as once more crushed Wall Avenue’s estimates.
Extremely, the share worth is now up 1,557% because the begin of 2023! As I write, this implies a £20k funding made inside a Shares and Shares ISA again then would have mushroomed into roughly £332k (discounting forex strikes).
That even leaves fellow AI inventory Nvidia within the mud — it’s up ‘simply’ 700% on this interval.
Sadly, I’ve by no means owned the inventory, regardless of contemplating it a handful of instances because it went public in 2020. Ought to I now rectify this expensive oversight? Let’s check out the earnings.
Palantir scores a hat-trick
For the fourth quarter, Palantir reported that income grew 36% yr on yr to $828m. This was higher than the $776m that analysts had been anticipating (beat primary).
Subsequent, the corporate’s adjusted earnings per share (EPS) climbed 75% to $0.14. Once more, this was increased than Wall Avenue was anticipating ($0.11). In order that was beat quantity two.
Lastly, administration provided better-than-expected steering for 2025. It sees full-year income of $3.75bn (31% progress), increased than the $3.52bn that was beforehand anticipated.
What we’ve got right here then is a giant double beat (on the highest and backside traces) and a steering increase. Palantir’s income continues to speed up!
Why is that this occurring?
The factor that’s fuelling all this progress is the corporate’s Synthetic Intelligence Platform (AIP). That is serving to organisations and enterprises harness AI to analyse huge quantities of information, automate complicated duties, and maker smarter selections. It may possibly uncover patterns and forecast future traits in actual time.
The numbers converse for themselves. US business income within the quarter rocketed 64% to $214m, whereas US authorities income jumped 45%. Its buyer rely grew 43% because it closed 129 offers price at the least $1m, 58 offers of at the least $5m, and 32 offers price at least $10m!
Eccentric CEO Alex Karp is at all times price quoting. In Palantir’s letter to shareholders, he stated: “Now we have the merchandise and attain of a longtime incumbent and the pace, progress, and agility of an rebel startup. It’s that almost all deadly of combos.”
In Q3, he stated {that a} “juggernaut is rising“. In This autumn, the CEO confirmed that the “software program juggernaut has certainly emerged“. The juggernaut, in fact, being Palantir.
In some ways, Karp jogs my memory of David Goggins, the previous Navy SEAL turned motivational speaker. If I would like motivation to rise up on a chilly morning to go for a run, or end that final mile, I may placed on one in all his rousing YouTube speeches.
Likewise, if I ever doubt the AI revolution has legs, I can tune into Karp’s quarterly commentary on AI. Reassuringly, he says: “We’re nonetheless within the earliest levels, the start of the primary act, of a revolution that may play out over years and many years.”
Insane valuation
Make no mistake, these numbers are mightily spectacular. Nevertheless, I’m nonetheless left with the impression that this high-quality inventory is grossly overvalued. Based mostly on the 2025 forecast, it’s now buying and selling at a price-to-sales (P/S) ratio of round 64.
In my expertise, it’s harmful to take a position at this a number of. So I feel traders contemplating the inventory ought to tread rigorously.
