Palantir Technologies Inc.: The Impact of the AI Wave on Financials

Palantir Technologies Inc. has experienced a substantial surge in its stock value this year, driven by the artificial intelligence (AI) wave. With the company's shares up 183% in 2023, investors are eager to see how this trend has affected its financial performance.

However, one analyst, Brent Thill from Jefferies, is taking a cautious approach ahead of the upcoming earnings announcement, scheduled after the closing bell. Thill believes that while earnings expectations are achievable, they offer limited upside due to several uncertainties in Palantir's business. These uncertainties include the recovery timing of Palantir's U.S. government business, the durability of its U.S. commercial growth, and the pricing strategy for the company's AI Platform.

Thill acknowledges that Palantir has been at the forefront of the AI wave, particularly with its recently launched AI platform. This platform enables a multimodal AI experience by combining predictive and causal AI insights with large-language model and generative AI capabilities. However, Thill prefers to remain on the sidelines until there are more tangible signs of strong business execution.

Another analyst, Brian White from Monness, Crespi, Hardt & Co., highlights that Palantir's commercial activity may be subject to economic fluctuations, while closing deals in the government market have proven to be unpredictable with irregular revenue recognition.

Despite these uncertainties and potential challenges, Palantir Technologies Inc. remains an exciting player in the AI landscape. Investors and analysts alike are keeping a close eye on how the company's financials will reflect the impact of the AI wave.

Palantir, the American data analytics company, has been impressing investors with its strong performance in the U.S. market. Despite this, one analyst rates the stock as neutral. While many stocks have benefited from the AI frenzy this year, Palantir stands out as one of the biggest winners. Other notable performers include Nvidia Corp., Meta Platforms Inc., and C3.ai Inc.

Palantir shares experienced a slight decline of 2.8% to $18.18 on Friday, but remained up by 2.2% for the week. In a recent development, the company announced its selection by the Department of Defense to automate coordination of spectrum band licensing with commercial parties.

Analysts surveyed by FactSet have projected second-quarter earnings of 5 cents per share on revenue of $533.4 million. They also estimated government sales of $301.9 million and commercial sales of $234 million.

Looking forward, analysts forecast estimated third-quarter earnings of 5 cents per share on revenue of $553.1 million for Palantir.

As the AI wave continues to shape the market, Palantir seems well positioned to capitalize on this trend, although not all analysts are fully bullish on the stock just yet.

Read also: Will AI do to Nvidia what the dot-com boom did to Sun Microsystems? Analysts compare current hype to past ones.

Related: Palantir is well positioned for AI wave, but Mizhuo analyst isn't ready to turn bullish on the stock yet.