To The Moon

I think I have shared my article on $Palantir Technologies Inc.(PLTR)$ countless times, and maybe it is time for us to understand why Palantir could remain one of the Top performing AI software companies.

We already know that PLTR surge 22% after its earnings call. The earnings call on 03 Feb 2025 saw the share price of PLTR gained 102.22% and the next earnings date would be on 12 May 2025.

The revenue growth metric is going to be front and center because when PLTR is trading at excessively rich valuations. There is a need to show the market that it is able to grow revenue and EPS at staggering numbers.

So if any stock want wall street to give them the current high valuation, then it need to show a very good growth story.

But a good growth story has to be backed up by extremely strong numbers and ever increasing numbers. This is what PLTR has shown in its latest earnings.

Let us delve into it with more details. I am holding PLTR for long term as I see huge potential in this data analytics platform provider.

Palantir (PLTR) Guidance For 2025 Impressive

In the Palantir Fourth Quarter 2024 Earnings Call, the company reported impressive financial metrics and growth figures. Palantir achieved a 36% year-over-year revenue increase in Q4 and a 29% rise for the full year, with U.S. business driving much of this success. The U.S. commercial revenue grew by 64% year-over-year and 20% sequentially in Q4.

Additionally, the company closed $1.8 billion in total contract value (TCV) during the quarter, marking a 56% increase year-over-year. Palantir's Rule of 40 score surged to 81, and they reported a record $517 million in adjusted free cash flow for Q4, representing a 63% margin. For fiscal year 2025, they are guiding to a midpoint revenue of $3.749 billion, reflecting a growth rate of 31%.

Despite the challenges, Palantir's unique positioning in the AI and enterprise software landscapes, particularly through its ontology framework, continues to drive significant demand and expansion opportunities.

With the AI revolution moving into inference focus, but the part on the data management is still a big one, so Palantir AIP would be something that would be coming to grow with more and more corporate bringing their data to cleanse, before they can deploy into existing open-sourced model.

What We Gathered From PLTR Latest Earnings Call

The earnings call reflected a strong positive sentiment with significant revenue growth, especially in the U.S. market, driven by the AI revolution and strong government contracts. Despite some challenges in Europe and a decline in strategic contract revenue, the overall performance was exceptional, marked by record operating margins and high net dollar retention.

Positive Highlights

Exceptional Revenue Growth

Revenue grew 14% sequentially and 36% year-over-year in Q4, with full-year growth at 29% year-over-year. U.S. business led with a 52% year-over-year increase in Q4.

As we have seen how PLTR have given us consistent earnings over the past four quarter, PLTR have managed to silence the market concern of overvaluation.

AI Revolution and Customer Expansion

Closed $1.8 billion of TCV in Q4, a 56% increase year-over-year, with 32 deals worth $10 million or more. U.S. commercial revenue grew 64% year-over-year.

PLTR have managed to win over many customer with their exceptional customer service, they are very hands-on with their customer deployment, guess this is key to its success.

Strong Government and International Performance

U.S. government revenue grew 45% year-over-year. Notable deals include extensions with the U.S. Army and U.S. Special Operations Command.

Record Operating Margins and Cash Flow

Adjusted operating margin expanded to 45%, the strongest in the company's history. Adjusted free cash flow for Q4 was $517 million, representing a 63% margin.

High Net Dollar Retention

Net dollar retention was 120%, driven by expansions at existing customers and new customers acquired.

Challenges and Headwinds

Anemic Growth in Europe

European operations saw a low growth rate of 4%, contrasting sharply with U.S. performance.

Declining Revenue from Strategic Contracts

Revenue from strategic commercial contracts expected to decline significantly in Q1 2025.

Why $140 Price Target Is Possible

Based on what we have been seeing since PLTR earnings call, it has been rising significantly, and the latest $Amazon.com(AMZN)$ earnings call also mentioned PLTR, because Palantir has partner with Amazon to take advantage of the platform to allow customer to use an integrated suite of technology to operationalize the use of Claude within Palantir’s AI Platform (AIP) while leveraging the security, agility, flexibility, and sustainability benefits provided by AWS.

On top of that we can see that Palantir strengths in Strong Expertise in AI and Data Analytics, Ability to Quickly Establish Real-World AI Use Cases and High Customer Retention and Expansion Rates are keys to Palantir growth in their earnings.

Based on the super trend I am using, we are looking at a possible $140 price target as PLTR has crossed the first target level of $111 this morning (06 Feb).

Analysing further using EMA, we can see that PLTR bulls has successfully create a very nice daily uptrend expansion and we are looking for more upside, with Palantir acquiring more customer and the market remain positive with this stock, we could be seeing another big move from $112 possibly to $120 by end of next week.

Summary

I would think that Palantir could continue to do well with the demand for more focus on data, but we need to be aware of the competition Palantir faces from established tech giants and new startups in the AI and data analytics space.

And also a global economic downturn could affect demand for Palantir's solutions and impact its financial performance. Increased regulations related to data privacy and AI could pose challenges for Palantir and Attracting and retaining top talent in the competitive tech industry is crucial for Palantir's success.

One important point is Palantir's high valuation is a key point to watch. While the company has strong growth potential, its stock price reflects high expectations. So PLTR need to continue to keep up with strong growth to maintain the high valuation expectation.

Appreciate if you could share your thoughts in the comment section whether you think PLTR could continue to move towards the $140 level.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.