With the first half of 2024 now done, there’s no doubt that disruption has been a major theme. Its presence has been felt in supply chains, production delays, and labor constraints across various industries. In the markets, the impact has varied, encompassing inflation, economic growth, and differing Federal Reserve expectations.
These disruptions were noted by Bank of America’s Mariana Perez Mora, but according to the 5-star analyst, the most potent form of disruption has come from the rise of AI. Palantir (NYSE:PLTR), in particular, is set to reap the rewards.
“We’re still in the early innings of AI adoption and expect Palantir to continue to see significant upside from this trend,” Mora opined.
The analyst believes that both main elements of Palantir’s business are poised for growth. On the government side, Mora anticipates that defense AI integration is “preparing for takeoff,” with 2024 likely to be looked back on as the year the DoD “shifted towards software and rapid tech modernization.”
As for AI, Mora believes Palantir is well-positioned to lead in meeting the increasing demand for both “highly complex AI NextGen developments,” – where it continues to secure “non-competitive” deals, indicating no other vendor can match their solutions – and the need for “AI proliferation and democratization.” In the latter area, Palantir is in a strong position to offer the DoD and other “highly regulated agencies” a foundational data infrastructure that enables the swift and secure integration of various applications and tech.
As for the commercial side of the business, Mora expects to see “momentum from bootcamps & other channels,” although she admits the positive impact from bootcamps has yet be translated to sales.
90% of 1Q24 year-over-year growth was down to customers that were on board already at the end of December 2023 and the “incremental” 40+ commercial clients only brought in $130,000 each to the quarter (5x lower than average commercial customer sales). But as of early May, over 900 organizations participated in bootcamps vs. the total of 427 commercial customers seen in 1Q24.
“As we approach the eight-month mark since the launch of AIP bootcamps, we expect to start to see the beginning of more meaningful conversion rate (considering usual sale cycles last 6 to 9 months),” the analyst confidently said on the matter.
All told, Mora rates PLTR shares a Buy, backed by a $28 price objective. The implication for investors? Upside of 10.5% from current levels. (To watch Mora’s track record, click here)
Most of Mora’s colleagues, however, aren’t of a bullish bent here. Based on a mix of 6 Holds, 4 Sells, and 3 Buys, the analyst consensus rates PLTR stock a Hold (i.e. Neutral). The average price target stands at $22.55, suggesting shares will be changing hands for an 11% discount a year from now. (See Palantir stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
