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S&P 500   5,087.03
DOW   39,069.11
QQQ   438.07
Top-Rated AMD nears major breakout level
Critical asset just had biggest fall on record (Ad)
Roku stock and the mother of all entry opportunities
AI powerhouse NVIDIA will hit $1000 soon
Critical asset just had biggest fall on record (Ad)
Nvidia, Royal Caribbean rise; Rivian, Etsy fall, Thursday, 2/22/2024
Rivian shares gets discounted; shares can move lower 
The Next Nvidia? (Ad)
The Trade Desk: 3 reasons to buy before a new all-time high
Wall Street sees a solid year ahead for homebuilders, though mortgage rates remain a wildcard
S&P 500   5,087.03
DOW   39,069.11
QQQ   438.07
Top-Rated AMD nears major breakout level
Critical asset just had biggest fall on record (Ad)
Roku stock and the mother of all entry opportunities
AI powerhouse NVIDIA will hit $1000 soon
Critical asset just had biggest fall on record (Ad)
Nvidia, Royal Caribbean rise; Rivian, Etsy fall, Thursday, 2/22/2024
Rivian shares gets discounted; shares can move lower 
The Next Nvidia? (Ad)
The Trade Desk: 3 reasons to buy before a new all-time high
Wall Street sees a solid year ahead for homebuilders, though mortgage rates remain a wildcard
S&P 500   5,087.03
DOW   39,069.11
QQQ   438.07
Top-Rated AMD nears major breakout level
Critical asset just had biggest fall on record (Ad)
Roku stock and the mother of all entry opportunities
AI powerhouse NVIDIA will hit $1000 soon
Critical asset just had biggest fall on record (Ad)
Nvidia, Royal Caribbean rise; Rivian, Etsy fall, Thursday, 2/22/2024
Rivian shares gets discounted; shares can move lower 
The Next Nvidia? (Ad)
The Trade Desk: 3 reasons to buy before a new all-time high
Wall Street sees a solid year ahead for homebuilders, though mortgage rates remain a wildcard

Can Palantir overcome doubts amid triple-digit earnings growth?

Palantir logo on an iPhone screen

Key Points

  • Analysts see data-mining specialist Palantir growing earnings by 312% when it reports 2023 results. 
  • The stock has been in a bullish trend, but saw some selling recently as the broader market rose.
  • Analysts are fretting about the company's federal government business, as well as its AI potential.
  • 5 stocks we like better than Palantir Technologies

Wall Street has high expectations for Palantir Technologies Inc. NYSE: PLTR when it reports fourth-quarter and full-year results on February 5. The data analysis and data-mining software maker is forecast to earn eight cents a share on revenue of $603.48 million for the fourth quarter.

Those would double earnings from the year-ago quarter and mark a 19% revenue increase.  

But analysts aren't universally optimistic about the stock's prospects, which may be causing some selling. In particular, investors and analysts are fretting about a decline in revenue from the federal government. 

The Palantir chart shows the stock gapping up by 4.89% on January 22, although with subsequent selling, it's given up those gains. However, Palantir stock is finding support near its 10-day and 21-day moving averages, converging bullishly as the 10-day is about to cross over the 21-day line.

Bullish moving-average crossover

When a short-term moving average crosses above a line, tracking a longer period, it signals a bullish trend. 

This crossover suggests that recent price trends are gaining strength, indicating increased buying momentum. 

The Selling in Palantir the week of January 22 didn't track with any selling in either the broad market or technology stocks in the Technology Select Sector SPDR Fund NYSEARCA: XLK

Palantir is not tracked within the S&P 500, as it's a new stock, having gone public in 2020. Its market capitalization of $36.18 billion puts it in the large-cap category. 

However, due to Palantir's size, the SPDR S&P 500 ETF Trust NYSEARCA: SPY and tech sector stocks are appropriate benchmarks.


So, what's next for the stock in light of upcoming earnings? 

Mixed track record of beating Wall Street views

In addition to the triple- and double-digit gains expected for the fourth quarter, the company is expected to grow earnings by 312% to 25 cents per share for the full year.

Palantir earnings data show the company has a mixed record regarding meeting, beating or missing analyst views.

The company has three principal software platforms: Gotham, Foundry and Apollo. 

Gotham's customer base is global defense agencies, intelligence communities, law enforcement, disaster relief organizations and others.

Recently launched AI platform

Corporations and enterprise users use Foundry to share data and analytics.

Apollo is a cloud-based system that allows users to write code once and deploy it throughout multiple environments. 

In 2023, the company launched its artificial intelligence platform (AIP), allowing customers to launch AI across multiple applications within days.

Cloud computing and AI are red-hot growth industries, and analysts are upbeat about Palantir's earnings growth. This year, the Wall Street estimate calls for a 17% increase in net income to 29 cents a share.

Nonetheless, Palantir analyst forecasts show a consensus view of "reduce," which you don't see very often, especially for a company expected to grow earnings by 17% in the current year.

Analysts' price target is $13.18, a downside of 20%. 

Concern about federal government contracts

So what's going on here? 

At the recent World Economic Forum in Davos, Switzerland, Palantir CEO Alex Karp told The Wall Street Journal that the federal government, which accounts for about 43% of the company's revenue, is a "cyclical and difficult" business. He added that government revenue isn't as reliably steady as private enterprise. 

On January 5, Jefferies downgraded Palantir stock from "hold" to "underperform" and lowered the price target from $18 to $13. 

The issue was related to Karp's comments about the federal government: Palantir is currently in a disagreement with the U.S. Army over data ownership. 

Underestimated the severity of slowdown

In his recent research note, Jefferies analyst Brent Thill wrote, "We underestimated the severity of the slowdown in Palantir's commercial and government businesses, which has resulted in a longer-than-expected demand recovery that could continue to constrain growth through 2024." 

The Army contract was recently renewed, but skepticism about Palantir’s AI business remains.  

In an interview with Yahoo Finance, Thill said Palantir’s AI “hype is ahead of the reality." 

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Should you invest $1,000 in Palantir Technologies right now?

Before you consider Palantir Technologies, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Palantir Technologies wasn't on the list.

While Palantir Technologies currently has a "Reduce" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Palantir Technologies (PLTR)
1.7898 of 5 stars
$23.60+3.8%N/A262.25Reduce$16.71
Technology Select Sector SPDR Fund (XLK)N/A$205.77+3.3%0.63%20.04HoldN/A
SPDR S&P 500 ETF Trust (SPY)N/A$507.50+2.1%1.31%N/AN/AN/A
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

  • stalterkate@gmail.com

Contributing Author

Retirement, Asset Allocation, and Tax Strategies

Experience

Kate Stalter has been a contributing writer for MarketBeat since 2021.

Additional Experience

Series 65-licensed investment advisor, financial advisor, Blue Marlin Advisors; investment columnist for Forbes, U.S. News & World Report

Areas of Expertise

Asset allocation, technical and fundamental analysis, retirement strategies, income generation, risk management, sector and industry analysis

Education

Bachelor of Arts, Saint Mary’s College, Notre Dame, Indiana; Master of Business Adminstration, Kellogg School of Management at Northwestern University

Past Experience

Founder, financial advisor for Better Money Decisions; editor, stock trading instructor for Investor’s Business Daily; columnist, podcast host, video host for MoneyShow.com; contributor for Morningstar magazine


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