Palantir (NASDAQ:PLTR) stock has seen its market-trouncing momentum stall since peaking in mid-February. Anyone following market trends will recognize the big data company as one of the AI-fueled bull market’s biggest winners. That’s clear from the fact that even after pulling back 32% from its February highs, the stock remains up a huge 267% over the past year.
The question investors must ask is whether the pullback represents the beginning of an even bigger downturn or signals an opportunity to load up before momentum builds again.
For one investor, known by the pseudonym KM Capital, the latter holds true.
“This looks like a prime buying opportunity for such a growth and profitability champion,” KM opined.
And the numbers back that up. Palantir stock’s last hurrah before the macro-driven slide came off the back of an outstanding Q4 report. Revenue jumped 36% year-over-year, marking the company’s seventh straight quarter of accelerating growth – a “very impressive streak” that underscores its strong momentum.
The strong performance extended to other metrics. The operating margin has been expanding from one quarter to the next, and the y/y difference between Q4 2024 and 2023 was, according to KM, “unbelievable.” The operating margin, which stood at 34% in 4Q23, expanded by eleven percentage points y/y to 45%, a “truly extraordinary event.”
Furthermore, Palantir is making “sound moves” by growing its partnership network. A key collaboration with Archer Aviation aims to enhance AI capabilities in aviation, and according to Precedence Research, the aviation software market is anticipated to nearly double over the next decade.
“I think that PLTR has sufficient expertise to deliver value via this partnership as it already has experience in delivering software for the U.S. Air & Space Force,” says KM.
Additionally, a new alliance with Databricks seeks to accelerate AI-powered application development, leveraging Databricks’ expertise in data processing. This collaboration is expected to be mutually beneficial, enhancing customer experiences.
Lastly, Palantir’s AIPCon 6 event further strengthened its industry connections. As major companies took part, KM thinks that was “also helpful for the company’s long-term growth prospects because it ensures expansion of the company’s market footprint and reach.”
Bottom line, while KM admits that his bullish thesis is not bulletproof, the investor thinks the positives outweigh the negatives and that requires a readjustment to his previous stance.
“Despite the uncertain market environment and mixed analyst ratings, I resume buying PLTR with caution due to its solid fundamentals and promising long-term growth prospects,” the investor summed up.
As a result, KM has bumped his rating on PLTR from Hold (i.e., Neutral) to Buy. (To watch KM Capital’s track record, click here)
Those “mixed analyst ratings” amount to 10 Holds and 4 Buys and Sells, each, all culminating in a Hold consensus view. Meanwhile, the average price target stands at $92.13, suggesting the stock will gain 9% in the months ahead. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.