Synthetic intelligence inventory Palantir (NASDAQ: PLTR) has been on my watchlist for years now. I’ve by no means purchased it although resulting from its excessive valuation.
With the inventory lately falling greater than 35% from its highs, nonetheless, the valuation has come down fairly a bit. So, I made a decision it was lastly time to drag the set off and get on the Palantir bandwagon.
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A real AI beneficiary
Palantir’s unbelievable development was a key issue behind my funding resolution. It is a expertise firm that’s benefitting from the AI revolution in an enormous method.
Simply have a look at latest This autumn outcomes. For the quarter:
- Income was up 70% yr on yr to $1.4bn
- US income was up 93% to $1.1bn
- US industrial income was up 137% to $507bn
I can’t keep in mind the final time I noticed a longtime firm develop its high line at 70% yr on yr. That’s just about extraordinary.
Word that for 2026, the corporate expects income development of 61%. That’s mind-blowing.
It’s not only a top-line story right here, nonetheless. Income are additionally skyrocketing.
For the fourth quarter, web earnings attributable to frequent stockholders was up 670% yr on yr to $609m. In the meantime, the corporate’s ‘Rule of 40’ rating (income development plus working margin) was 127 (once more, nearly extraordinary).
These outcomes recommend that we now have a really distinctive firm right here. This isn’t your common software program firm.
“Our customers aren’t tentatively trying AI. They’re committing to it at scale, with Palantir as the driving force.”
Ryan Taylor, Palantir Chief Income Officer and Chief Authorized Officer
Earnings name perception
Studying by means of the This autumn earnings name transcript, there was one half that jumped out at me. It was a quote from an govt at a building firm who mentioned: “We’ve gone all-in a lot so that each different software program should justify its existence, and to this point they haven’t been capable of. The ontology is the key weapon. Nothing else comes shut. And never solely are we eliminating third-party software program; we’ve changed their performance after which overwhelmed them to new options, all throughout the yr, due to the ontology.“
Clearly, this is only one firm’s suggestions. Nevertheless it means that Palantir has a robust product.
Palantir’s ‘ontology’ is basically the interpretation of knowledge into comprehensible ideas. It permits customers (people and AI brokers) to make selections straight throughout the platform.
A small purchase for me
Now, I’ll level out that my inventory buy was very small. Proper now, Palantir is among the smallest holdings in my portfolio.
I’ve began with a tiny place for a number of causes. One is that the inventory is falling – the downtrend might have additional to run.
One other is that the inventory remains to be priced for very excessive development (the price-to-earnings (P/E) ratio is about 100). But there’s no assure that the robust development will proceed.
I see a number of potential in the long term, nonetheless. I plan to maintain shopping for the inventory on share worth weak spot and construct up my place over time.
