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Palantir is my best artificial intelligence (AI) stock to buy right now. This is why.

Over the past year, investors have shown great interest in artificial intelligence (AI) stocks. As technology transforms the technology industry, the potential for breakthrough productivity is driving optimism across the industry.

Perhaps no stock embodies this hope better than Palantir (NYSE:PLTR). While the company has long relied on AI to power its applications, the use of generative AI could transform its future. Here’s how.

Palantir and generative AI

Palantir has become known for generating analytical insights from AI. It started in the field of national defense, with many crediting the Gotham platform with helping the CIA find Osama bin Laden.

However, with a limited number of customers on the government side, Palantir founded Foundry to apply its analytical skills to the commercial sector, expanding the addressable market.

Still, it’s likely that the Artificial Intelligence Platform (AIP) will unlock most of the company’s growth potential. AIP applies generative AI capabilities, using business data, action and logic to deliver insights.

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The company demonstrated the power of AIP through its bootcamps, its five-day workshops that help potential customers find use cases for AI.

Through the bootcamps, Palantir delivered workflows based on customer data, a process that previously took one to three months. These dramatically shortened time frames lead to enormous productivity gains. One potential customer talked about “100 use cases,” while another boasted about “endless solutions” from this platform. Ultimately, this could provide Palantir with a significant increase in revenue.

By the end of 2023, Palantir had provided more than 560 bootcamps within 465 organizations.

Where Palantir stands financially

The benefits of AIP do not appear to have delivered the revenue growth one would expect. Its 2023 revenue of $2.2 billion grew only 17% annually. Moreover, the forecast revenue of $2.66 billion for 2024 equates to a 19% revenue gain if that forecast is correct.

Still, the company has now posted GAAP profits for five quarters, and net income attributable to shareholders of $210 million is well above the prior year’s loss of $374 million. Additionally, analysts predict net income growth of 32% through 2024, which should help boost the stock price.

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Admittedly, the company has already experienced some of the benefits, as the stock is up 175% in the past year. That increase has brought the forward price-earnings ratio to almost 70.

Nevertheless, as the benefits of AIP become better known, it is likely that more organizations and governments will benefit from the productivity gains it offers. This trend could make Palantir stock worth its premium price.

Consider Palantir

The power of Palantir’s generative AI tool likely makes it a must-have stock. Admittedly, sales growth seemed slow given the power of the technology. Investors have also noticed this and offered their shares at a high valuation.

However, given the huge productivity gains enabled by Palantir’s software, this should give the company enormous pricing power. Over time, this should boost revenue and income levels, fuel rapid growth and make it one of the most critical and desirable artificial intelligence stocks.

Should You Invest $1,000 in Palantir Technologies Now?

Before you buy shares in Palantir Technologies, consider the following:

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Will Healy holds positions at Palantir Technologies. The Motley Fool holds positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

Palantir is my best artificial intelligence (AI) stock to buy right now. This is why. was originally published by The Motley Fool

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