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What's next for Palantir stock after earnings selloff

Published 05/10/2024, 06:12 AM
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Palantir (NYSE:PLTR) stock witnessed a sharp drop during the week, triggered by the company’s latest quarterly report, in which the AI software maker delivered 2024 guidance that fell short of analyst estimates. Despite this, analysts at Bank of America maintain a positive stance on PLTR, particularly after a recent AI expo event attended by Palantir.

Palantir stock drops on earnings

Shares in Palantir plummeted more than 15% on Tuesday, a day after the big data analytics and AI software maker provided weaker-than-expected guidance for the full fiscal 2024.

For Q1, the company reported adjusted earnings per share (EPS) of 8 cents, matching consensus estimates. Revenue rose 21% year-over-year to $634 million, topping the estimated $625 million.

For the fiscal Q2 2024, Palantir projects revenue to be in the range of $649 million to $653 million, versus the consensus projection of $653 million. Moreover, the company anticipates full-year revenue to be between 2.68 billion and $2.69 billion, short of the LSEG consensus of $2.71 billion.

Despite solid first-quarter revenue and strong success in marketing its AI solutions, the full-year guidance remained slightly weaker than expected, resulting in a double-digit decline for Palantir stock.

Earlier this year, Palantir secured a $178 million contract with the U.S. Army to help build a next-generation, field-deployable sensor station.

During the period, the firm conducted over 660 “bootcamps,” which allow PLTR’s prospective clients to get practical experience using its technology.

Although 2024 guidance was weak and led to a Palantir stock dip, analysts on Wall Street shared largely positive reactions in the wake of the company’s report.

“In what is always a mass of unique metrics to unpack, PLTR’s Q1 results showed solid upside on both top and bottom line with a slight upward revision to full-year targets,” Citi analysts commented, raising their 12-month target price from $23 to $25.

“The company’s new customer acquisition momentum continued with record new additions, while commercial deal value growth was also quite healthy. The main nits in the quarter were around weaker collections with billings growth of just +2%, and weaker operating cash flow,” they added.

BofA remains positive after attending SCSP/AI Expo

Earlier this week, the Special Competitive Studies Project (SCSP) AI Expo, an event aimed at discussing the strategic implications and applications of AI to improve national competitiveness, took place on May 7-8 in Washington, D.C.

Visiting the event were Bank of America analysts, who said the event involved “much speculation on what the proliferation of AI will mean for the world.”

Among the companies that attended the expo was Palantir, which is well-known for developing government-focused AI software.

“In our discussions with Palantir (PLTR), the sense of urgency for the Government to rapidly adopt and deploy AI-enhanced products was palpable,” Bank of America analysts wrote.

“PLTR showcased products which support advancing and increasing the efficiency of the U.S. industrial base (AIP), AI for battlefield awareness and decision making on Project Maven, joint mission planning, and enabling JADC2 with intelligence at the edge,” they added.

Dr. Alex Karp, CEO of Palantir, stressed that while the US holds a crucial advantage in software development, maintaining this edge as a strategic deterrent requires the U.S. government to accelerate its adoption of AI, BofA highlighted.

“We maintain our Buy on Palantir as we continue to see Palantir as uniquely positioned to capture the growing commercial and government demand for AI products,” the bank’s analysts noted.

Despite recent declines, Palantir stock remains up 23% since the start of the year, notably outperforming the broader market.

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