Artificial intelligence (AI) has defined the investment narrative of 2024, and Palantir Technologies Inc. (PLTR) has emerged as a massive beneficiary of this transformative trend thanks to its cutting-edge Artificial Intelligence Platform (AIP), which helps businesses tackle challenges like supply chain disruptions and production inefficiencies. This strategic focus has translated into a jaw-dropping 290.7% gain in its shares so far this year, making it one of 2024’s standout performers as investors flock to capitalize on the AI revolution.

While Palantir’s strategic focus on AI definitely wooed investors, several other catalysts have also fueled its meteoric rise in 2024. For instance, Palantir’s September entry into the prestigious S&P 500 Index ($SPX) provided a significant boost to its momentum, cementing its place among America’s corporate elite. But the excitement didn’t stop there. The company’s latest remarkable quarterly results and the buzz surrounding AI-driven policies from the incoming Trump administration have further boosted confidence among investors.

And earlier this month, Palantir announced plans to shift its listing from the NYSE to the Nasdaq, a strategic move effective Nov. 26 that aligns it with tech giants like Apple (AAPL) and Meta (META). More importantly, the Nasdaq listing paves the way for a potential spot in the prestigious Nasdaq-100 Index ($IUXX), which features the largest non-financial companies on the exchange.

Such inclusion would not only amplify Palantir’s market visibility, but also attract significant institutional investment, as funds tracking the index would be compelled to buy its shares - further fueling PLTR’s upward momentum. Keeping all these factors in mind, can Palantir maintain its red-hot momentum into 2025?

About Palantir Technologies Stock

Founded in 2003, Denver-based Palantir Technologies Inc. (PLTR) has rapidly grown into a powerhouse in intelligence analysis and operational planning, trusted by governments, militaries, and major enterprises alike. Renowned for its cutting-edge AI software, Palantir empowers users to make smarter, data-driven decisions, driving efficiency and precision across sectors. 

At the core of its offering is the AIP, a cutting-edge solution that integrates generative AI directly into business operations, making it an essential tool for transforming how organizations work and innovate.

Valued at around $150.4 billion by market cap, shares of Palantir have skyrocketed an astounding 238% over the past year and 290% on a YTD basis, easily dwarfing the broader SPX’s healthy returns of 32.5% over the past year and 26.5% YTD growth. In the past three months alone, PLTR has delivered a 116.4% return.

Given the company’s stellar price action so far this year, Palantir’s growth story certainly comes with a steep price tag. Priced at a lofty 174.4 times forward earnings and 53.8 times sales, PLTR is not only valued at a premium to the tech sector median, but also its own five-year historical average multiples, signaling that investors are betting big on its future growth potential.

Palantir Rallies on Q3 Earnings

Palantir delivered a blowout Q3 earnings performance that sent its stock soaring more than 23% on Nov. 5. The company reported a 30% year-over-year jump in revenue to $725.5 million, which sailed past estimates by 3.1%, while its adjusted EPS of $0.10 surged 42.9% annually, beating Wall Street’s expectations by 10.1%.

The company’s impressive performance was driven by a 44% year-over-year increase in U.S. revenue, reaching $499 million. U.S. commercial revenue exploded by 54% annually to $179 million, and government revenue climbed 40% year over year to $320 million. The company’s momentum didn’t stop there, as it closed 104 deals valued at over $1 million, fueling its continued expansion.

Palantir’s customer base grew by 39% year over year, highlighting the increasing demand for its AI-powered data solutions. During the quarter, Palantir generated an impressive $420 million in cash from operations, boasting a 58% margin, while its adjusted free cash flow skyrocketed to $435 million, or a 60% margin. With $4.6 billion in cash, cash equivalents, and short-term U.S. Treasury securities, Palantir’s balance sheet remains rock solid.

Reflecting on the Q3 performance, CEO Alex Karp said, “We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down. This is a U.S.-driven AI revolution that has taken full hold. The world will be divided between AI haves and have-nots.”

Looking ahead to fiscal 2024, management raised its revenue guidance to range between $2.805 billion and $2.809 billion. Additionally, it upped its U.S. commercial revenue forecast to exceed $687 million, projecting a growth rate of at least 50%. 

Analysts tracking Palantir expect the company’s GAAP earnings to climb a robust 162.5% year over year to $0.21 per share in fiscal 2024 and rise another 42.9% to $0.30 per share in fiscal 2025. 

Palantir’s CEO Sells Off Major Stake in the Company

As one of Palantir’s co-founders, Alex Karp has been a driving force behind the company since its inception, holding various leadership roles throughout the years. Currently serving as the CEO, Karp has been instrumental in shaping Palantir’s trajectory and has been a key member of its Board of Directors since 2003, steering the company to its current position of prominence in the tech industry.

However, in several high-profile insider transactions, CEO Karp made a substantial move that has drawn attention. In late November alone, the executive unloaded $556 million worth of shares in three tranches, executed as part of a Rule 10b5-1 plan. 

While this indicates the sales were pre-planned, and likely doesn’t signal anything in particular about Karp’s sentiments toward the stock price, this could keep a temporary lid on PLTR’s momentum.

What Do Analysts Expect For Palantir Technologies Stock?

Jefferies analysts remain unimpressed with PLTR, reiterating an “Underperform” rating with a price target of $28. This implies a potential downside of 58% from the current price. The firm’s bearish outlook is driven by concerns over the stock’s inflated valuation, with analyst Brent Thill also flagging that Karp’s insider selling plan allows for the CEO to unload up to 9 million more shares through next May.

On the flip side, shares of Palantir landed a few bullish price-target hikes on optimism surrounding its listing change. BofA Securities analyst Mariana Perez Mora raised Palantir’s price target to a Street-high of $75 from $55, praising the company’s potential to digitize industries ranging from finance to defense.

Wedbush’s Daniel Ives also bumped his price target to $75 from $57, and maintained an “outperform” rating, anticipating that the AI-driven enterprise phase, starting in 2025 with large language models, will serve as a key growth catalyst for the software sector.

Overall, though, Wall Street remains cautious about PLTR stock, with a consensus “Hold” rating. Of the 15 analysts in coverage, two advise a “Strong Buy,” six maintain a “Hold,” two recommend a “Moderate Sell,” and the remaining five suggest a “Strong Sell.”

PLTR closed Friday well above its average analyst price target of $33.78. The newly raised targets from BofA and Wedbush, both set at $75, imply that the stock has the potential to climb an additional 11.8% from here.                      

On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.