Developments in the artificial intelligence (AI) sector have generated a lot of headlines in recent years. The capabilities of AI systems to create original content, automate processes and increase productivity have companies of all stripes eager to secure a share of the resulting windfall.
One company well positioned to benefit from this trend is Palantir Technologies (NASDAQ:PLTR). It has decades of experience creating new AI solutions, which came in handy when the generative AI trend went mainstream in early 2023. That long-term tailwind has been extremely profitable for the company and its shareholders. The stock is up 333% so far this year and up 1,060% since the start of 2023, with gains driven by robust results and growing opportunities.
The positive developments for Palantir have been so plentiful this past week that it’s likely some investors didn’t notice all of the announcements. So here are four things you might have missed this week.
To start the week, Nasdaq has announced that Palantir will be added to the Nasdaq-100 index before the market opens on December 23. This was widely expected after Palantir changed its listing from the New York Stock Exchange to the Nasdaq last month.
Palantir said in a press release at the time: “The company expects to begin trading as a Nasdaq-listed company on November 26, 2024 and its common stock will continue to trade under the symbol ‘PLTR.’ the eligibility requirements of the Nasdaq-100 Index.”
While the listing was largely a cosmetic change, it could boost demand for Palantir shares because mutual funds, institutional investors and exchange-traded funds that track the index will have to buy them.
Palantir and Red cat companies (NASDAQ: RCAT) has announced a strategic partnership that will see Palantir’s visual navigation software integrated into Red Cat’s Black Widow drone. The company will also deploy Palantir’s Warp Speed production control system.
“Equipped with Palantir’s visual navigation and artificial intelligence, the Black Widow will be one of the most capable drones ever deployed by the Department of Defense, compact enough to fit in a backpack,” said Jeff Thompson, CEO of Red Cat .
The terms of the contract were not provided.
Palantir announced an extension of its “long-standing partnership with the U.S. Army to deliver Army Vantage capability in support of the Army Data Platform (ADP).” The platform uses data and Palantir’s AI to accelerate decision-making and improve combat readiness.
While the original contract focused on personnel and combat readiness, the ADP system has become an integral part of the Army’s data-driven decision-making process. It supports soldiers in a growing list of use cases in areas such as logistics, risk management, recruitment and financial management. This new agreement will expand the contract to include data from across the Department of the Army.
The total value of the contract is $400 million, but could potentially be increased to $618 million over the next four years.
On the other side of the war and peace coin, Pray.com chose Palantir to help with foreign language translations for the company’s faith-based content. The company noted the challenge of offering its offerings in multiple languages, which was prohibitively expensive due to staffing needs and the complexity of local idioms.
Using Palantir’s Ontology Software Development Kit, Pray.com was able to handle audio and video transcriptions and translations “in multiple languages”, achieving “native speaker quality”. Perhaps just as importantly, it could achieve these results in minutes, rather than the days or weeks of human effort that previously required large volumes of translations.
Terms of the deal were not disclosed.
It’s important to point out that none of these developments are likely to be decisive for Palantir individually. Together, however, they strengthen the company’s investment thesis.
Given Palantir’s rapid growth trajectory, commonly used valuation metrics such as price-to-earnings ratios and price-to-sales ratios fall short as gauges for the stock. However, applying the more appropriate price-to-earnings-growth (PEG) ratio – which takes into account Palantir’s robust growth rate – yields a multiple of 0.61. In general, the experts consider any positive PEG ratio below 1 as a sign of an undervalued stock.
For price-sensitive investors concerned about current levels, it may be worthwhile to buy Palantir using a dollar-cost averaging strategy: investing fixed amounts of money in the stock at regular intervals, regardless of what the price does at that moment. Or you can wait and hope the stocks fall.
That said, given the company’s accelerating growth and the size of the opportunity, I believe Palantir is a buy.
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Danny Vena holds positions at Palantir Technologies. The Motley Fool holds positions in and recommends Palantir Technologies. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
4 Things Palantir Investors May Have Missed This Week was originally published by The Motley Fool
