It is an exciting time to be in the AI space, as the combination of groundbreaking technological advances and plenty of hype has turned shares of the companies working in the field into “must haves” for investors.
One such name, Palantir (NYSE:PLTR), is on the short list for many portfolios. Initially created to assist U.S. government agencies to crack down on illicit activities, the big data analytics firm has expanded into commercial opportunities helping private sector clients to utilize large datasets and improve their decision-making.
The growing demand for AI applications has helped push PLTR stock higher and higher over the past year, with shares up over 60% in 2024 alone.
So, is there room for further share price growth on the horizon? Citi analyst Tyler Radke does not see it. “While we’ve turned incrementally more positive on PLTR moving off our sell rating earlier this year, we struggle to see positive near-term catalysts for the stock,” writes Radke.
The analyst recently went on a field trip to Palantir’s New York offices to hear about its intentions straight from the source. His reaction was mixed, reflecting both the possibilities and the perils facing the company in the months ahead.
On the plus side, Radke was impressed with the firm’s Artificial Intelligence Platform (AIP), a record number of bootcamps with prospective clients in the most recent quarter, and additional opportunities for commercial customers. Citing his conversation with Palantir’s CFO, the analyst sees promise in “the longer-term opportunity ahead with expected major expansion, especially with some of these new commercial wins which included displacements of large back office/procurement incumbent vendors.”
However, countering these positive trends are uncertainties about Palantir’s ability to translate momentum from the AIP conventions into revenues. Radke is still seeking greater clarity regarding the “monetization pathway,” with the meeting confirming the opportunity is still in its early stages.
In addition, Radke voiced his concern over revenues from Palantir’s government work. “Despite the recent press releases around government contracts (VA + ARPA-H), the timing of large deals remains uncertain to stabilize the government business this year,” the analyst further said.
Radke, therefore, reiterated a Neutral rating for the shares, along with a 12-month price target of $25. This figure represents a drop of around 10% from current levels. (To watch Radke’s track record, click here)
The general view from Radke’s colleagues on Wall Street seems to align with his thinking. With 3 Buys, 6 Holds, and 4 Sells, PLTR claims a Hold consensus rating. At $22.55, the 12-month average price target implies shares are overvalued by 18.5%. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.