Palantir stock soars as Defense Department earnings blow through

On By Littum

Palantir ( PLTR ) stock was up more than 20% early Tuesday after the third quarter earnings exceeded expectations thanks to better-than-expected spending by the US government on its AI technology.

Global public spending on Palantir’s products, primarily from the United States, rose 40% from a year earlier to $408 million in the third quarter, accounting for 56% of the company’s total revenue for the period. This was ahead of the $379 million expected for the segment, according to the Bloomberg consensus estimate.

Palantir, which makes a range of data mining and analytics software, including its Artificial Intelligence Platform (AIP), most recently won a $100 million US military contract in September for their AI tools that identify targets for airstrikes.

“The AI ​​revolution is underway now,” Palantir Chief Revenue and Legal Officer Ryan Taylor said on a call with investors late Monday. “The gap between AI haves and have-nots is widening fast, and the whole world is watching.”

Taylor said Palantir’s US government business saw its “strongest sequential growth in 15 quarters, driven largely by our DoD (Department of Defense) business’s 21% quarter-on-quarter growth.”

Meanwhile, Palantir’s revenue from commercial businesses fell short of expectations, coming in at $317 million versus the $317 expected. Its corporate clients include oil and gas giant BP (BP), CBS Broadcasting and General Mills (GIS). The company said the sale was affected by “a decline in revenue from a government-sponsored business in the Middle East.” Palantir did not respond to a request for additional details from Yahoo Finance.

Overall, the company reported adjusted earnings per share of $0.10 for the quarter, a penny ahead of expectations, on revenue of $725.5 million, topping the $703.7 million expected by Wall Street analysts.

Palantir shares are up more than 190% since the start of the year, driven by a broader boom in artificial intelligence and The US government’s growing interest in AI warfare technologies. The stock was added to the S&P 500 in September.

“Palantir is among a handful of infrastructure software companies that have started to monetize generative artificial intelligence,” Deutsche Bank ( DB ) analyst Brad Zelnick wrote in a note to investors on Monday.

While acknowledging Palantir’s merits, Wall Street analysts have generally been skeptical of the stock increase. On average, they see shares falling to $32.81 over the next year, according to Bloomberg data, with about half of analysts tracked by Bloomberg recommending selling the stock. Zelnick himself has a Sell rating on the stock and sees shares falling to $26. Shares were around $50 Tuesday morning.