4 things Palantir investors may have missed this week

The development in artificial intelligence (AI) sector has generated many headlines over the past few years. AI systems’ abilities to create original content, automate processes and increase productivity have businesses of all stripes eager to secure a piece of the resulting windfall.

One company that is well positioned to take advantage of this trend is Palantir Technologies(NASDAQ: PLTR). It has decades of experience in creating new AI solutions, which came in handy then generative AI trend went mainstream early in 2023. The secular tailwind has been highly profitable for the company and its shareholders. The stock is up 333% so far this year and up 1,060% since the start of 2023, with its advance driven by robust results and an expanding opportunity.

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The positive developments for Palantir were so plentiful over the past week that it’s likely some investors didn’t catch all the announcements. So here are four things you might have missed this week.

1. Admission to the Nasdaq 100 index

To kick off the week, Nasdaq announced that Palantir will be added Nasdaq-100 index before the market opens on December 23. This was widely expected after Palantir switched its listing from the New York Stock Exchange to the Nasdaq last month.

In a press release at the time, Palantir said: “The company expects to begin trading as a Nasdaq-listed company on November 26, 2024, and its common stock will continue to trade under the symbol “PLTR.” Upon the transfer, Palantir expects to meet the eligibility requirements for the Nasdaq-100 – the index.”

While the IPO was largely a cosmetic change, it could boost demand for Palantir stock, which investment associationsinstitutional investors and exchange-traded funds to track the index will have to buy it.

2. A new partnership

Palantir and Red Cat Holdings(NASDAQ: RCAT) announced a strategic partnership that will see Palantir’s Visual Navigation software integrated into Red Cat’s Black Widow drone. The company will also deploy Palantir’s Warp Speed ​​production operating system.

“Equipped with Palantir’s visual navigation and artificial intelligence, Black Widow will be among the most capable drones ever fielded by the Department of Defense, compact enough to fit in a backpack,” said Red Cat CEO Jeff Thompson.

The terms of the contract were not given.

3. Extending its Army Vantage contract

Palantir announced an extension of its “longstanding partnership with the US Army to provide the Army Vantage capability in support of the ‘Army Data Platform’ (ADP).” The platform leverages data and Palantir’s AI to accelerate decision-making and improve combat readiness.

While the original contract was focused on personnel and combat readiness, the ADP system has been integrated into the Army’s data-driven decision-making process. It supports soldiers in a growing list of use cases in areas such as logistics, risk management, recruitment and financial management. This new agreement will expand the contract to include data across the entire Department of the Army.

The total value of the contract is $400 million, although it could potentially increase to as much as $618 million over the next four years.

4. Translation of faith-based content

On the other side of the war and peace coin, Pray.com chose Palantir to help with foreign language translations for the company’s faith-based content. The company noted the challenge of delivering its offerings in a variety of languages, which has been costly due to staffing requirements and the complexity of local idioms.

Using Palantir’s Ontology Software Development Kit, Pray.com was able to process audio and video transcriptions and translations “across multiple languages,” achieving “the quality of native speakers.” Perhaps just as important, it was able to achieve these results in a matter of minutes, rather than the days or weeks of human effort its large volumes of translations had previously required.

Terms of the deal were not disclosed.

What it all means for investors

It’s important to point out that none of these developments are likely to move the needle for Palantir individually. Together, however, they strengthen the company’s investment thesis.

Given Palantir’s rapid growth trajectory, commonly used valuation metrics like price-to-earnings and price-to-sales ratios fall short as measures of the stock. But to apply it more appropriately forward price/earnings relative to growth (PEG). — which considers Palantir’s robust growth rate — yields a multiple of 0.61. Generally, the experts consider any positive PEG ratio below 1 as a sign of an undervalued stock.

For price-sensitive investors concerned about its current level, it may be worth buying Palantir using a dollar cost averaging strategy – investing fixed amounts in the stock at regular intervals, regardless of what the price is doing at those times. Or you could wait and hope that the stock falls.

That said, I think given the company’s accelerating growth and the scope of the opportunity Palantir is a buy.

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Danny Vena holds positions at Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool recommends Nasdaq. The Motley Fool has one disclosure policy.