Picture supply: Getty Photos
Shares of Palantir Applied sciences (NASDAQ: PLTR) exploded 27% larger at the moment (4 February). This follows the software program firm’s fourth-quarter earnings, which as soon as once more crushed Wall Road’s estimates.
Extremely, the share value is now up 1,557% for the reason that 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 foreign money strikes).
That even leaves fellow AI inventory Nvidia within the mud — it’s up ‘just’ 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 have been anticipating (beat primary).
Subsequent, the corporate’s adjusted earnings per share (EPS) climbed 75% to $0.14. Once more, this was larger than Wall Road 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), larger than the $3.52bn that was beforehand anticipated.
What we have now right here then is an enormous double beat (on the highest and backside strains) and a steering increase. Palantir’s income continues to speed up!
Why is that this taking place?
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 could uncover patterns and forecast future developments in actual time.
The numbers converse for themselves. US industrial income within the quarter rocketed 64% to $214m, whereas US authorities income jumped 45%. Its buyer depend grew 43% because it closed 129 offers value at the very least $1m, 58 offers of at the very least $5m, and 32 offers value a minimum of $10m!
Eccentric CEO Alex Karp is at all times value quoting. In Palantir’s letter to shareholders, he mentioned: “We have the products and reach of an established incumbent and the speed, growth, and agility of an insurgent startup. It is that most lethal of combinations.”
In Q3, he mentioned {that a} “juggernaut is rising“. In This fall, 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 need motivation to stand up on a chilly morning to go for a run, or end that final mile, I may placed on one among 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 are still in the earliest stages, the beginning of the first act, of a revolution that will play out over years and decades.”
Insane valuation
Make no mistake, these numbers are mightily spectacular. Nonetheless, I’m nonetheless left with the impression that this high-quality inventory is grossly overvalued. Primarily based 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 believe traders contemplating the inventory ought to tread rigorously.
