IBD Stock Analysis
- Stock not yet actionable amid a 53% gain thus far in 2023
- Shares in consolidation since February with buy point of 10.41
- If it passes buy point, investors should wait until moving averages catch up
Industry Group Ranking
* Not real-time data. All data shown was captured at
1:02PM EDT on
Palantir Technologies (PLTR) is the IBD Stock of the Day as the enterprise software maker trades near a buy point. PLTR stock is not yet actionable amid its 53% gain in 2023.
On the stock market today, Palantir dropped 3.8% to 9.50. Shares trade well below the software maker’s all-time intraday high of 45 set in late January 2021. Further, any investors that bought PLTR stock at 7.25 on its direct listing on Sept. 30, 2020, can only point to a small gain.
PLTR stock rallied on its first-quarter earnings report May 8. Meanwhile, Palantir stock has been in a consolidation with an entry point of 10.41 since February. But investors should watch Friday’s action, including volume.
A bullish development would be for Palantir stock to form a handle and for moving averages to catch up to where the stock is trading.
If shares somehow reverse and punch above the buy point on Friday, investors should delay taking a position. The stock would be too extended from its moving averages. If it forges a handle, the 21-day or 50-day moving lines will likely catch up somewhat.
PLTR Stock: Improved Profitability
Improved profitability has boosted PLTR stock. In the fourth quarter of 2022, Palantir posted net income of $31 million using generally accepted accounting principles, or GAAP. It marked Palantir’s first quarter of positive GAAP net income. In the March quarter, it had net income of $17 million.
However, decelerating revenue growth is an issue. In 2022, revenue growth slowed to 24% from 40% in 2021 and 47% in 2020.
Also, Palantir gets nearly 60% of its revenue from government agencies. They use Palantir software for intelligence gathering, counterterrorism and military purposes. In addition, the software maker has expanded into the health care, energy and manufacturing.
The Denver-based company offers three platforms. One is Palantir Gotham, used primarily by government agencies. Also, there’s Palantir Metropolis for banks, financial services firms and hedge funds. Further, Palantir Foundry is used by corporate clients. Palantir often customizes software for customers.
New Artificial Intelligence Platform
Meanwhile, embedding artificial intelligence into its software platform has been a strategy for many years. Amid the sudden buzz around “generative” AI, the question is whether Palantir will capitalize on the opportunity.
Generative AI could roil a host of industries by creating text, images, video and computer programming code on their own. Also, generative AI technology already is finding applications in marketing, advertising, drug development, legal contracts, video gaming, customer support and digital art.
When releasing its first-quarter earnings, Palantir announced its newest offering. “Artificial Intelligence Platform” It will begin rolling out to select customers this month.
“The goal of AIP is to blend the machine learning technologies of existing PLTR technologies with large language models, coexisting in current PLTR platforms, helping businesses and governments make more data-driven decisions and further optimize processes,” said a Bank of America report.
High Composite Rating
PLTR stock holds an IBD Composite Rating of 98 out of a best possible 99, according to IBD Stock Checkup.
IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. Also, the best growth stocks have a Composite Rating of 90 or better.
Further, PLTR stock has an Accumulation/Distribution Rating of A-minus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling.
The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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