Palantir’s AI-Driven Profits Soar, S&P 500 Inclusion Looms

Palantir is now eligible for inclusion in the prestigious S&P 500 index, which typically triggers heightened demand for its shares.

Palantir Technologies (PLTR.N) has announced that its artificial intelligence (AI) offerings are poised to fuel growth in the final quarter of 2023, following its fourth consecutive quarterly profit.

This achievement is attributed to the increasing demand for the company’s data analytics services among corporate clients.

As a result of this positive news, Palantir’s stock experienced a significant surge of nearly 20%. CEO Alex Karp expressed his enthusiasm, hailing the profit as the “most significant” in the company’s 20-year history.

Furthermore, Palantir is now eligible for inclusion in the prestigious S&P 500 index, which typically triggers heightened demand for its shares.

For the fourth quarter of 2023, Palantir expects its revenue to range between $599 million and $603 million.

This projection surpasses analysts’ estimates, with the midpoint of this range exceeding the expected $600.5 million, as reported by LSEG data.

One notable success for Palantir is the strong interest generated by its “bootcamps” introduced in October. These programs offer clients access to its AI platform for periods ranging from one to five days, serving as a promising indicator of future demand.

Chief Revenue Officer Ryan Taylor stated that by the end of November, the company is on track to conduct bootcamps with 140 organizations, with half of them scheduled for that month.

Palantir’s AI platform saw substantial growth in user numbers during the July-September period, nearly tripling its user base, according to Taylor.

However, despite these successes, there are indications of slowing growth in Palantir’s primary government-focused business during the third quarter.

Revenue from government clients increased by 12%, falling short of estimates and the 15% growth recorded in the previous quarter.

The company attributed this to budget constraints at the government level but remained optimistic about demand, given ongoing geopolitical tensions.

Analysts, such as Rishi Jaluria from RBC Capital Markets, suggest that Palantir’s stock may not be able to sustain these gains unless the company demonstrates differentiated generative AI technology.

On the commercial front, Palantir’s revenue, which includes corporate clients, experienced a notable 23% increase, amounting to $251 million.

This robust performance contributed to an overall 17% rise in revenue, slightly surpassing estimates.

The company’s adjusted profit per share of 7 cents aligned with analysts’ expectations of 6 cents per share.