Will Palantir Stock Join the “Magnificent Seven” by 2030?

Will Palantir Stock Join the “Magnificent Seven” by 2030?

Palantir Technologies (NYSE:PLTR) gets its share of hype, and for good reason. The software, artificial intelligence (AI) and analytics platform for businesses and governments has grown rapidly since its IPO in 2020. It also has a legion of enthusiastic shareholders. Part of that enthusiasm has to do with its eccentric CEO, who has done things his own way to disrupt a once-heavy industry (government defense spending).

The growth (and hype) argues that Palantir is poised to become one of the next big tech stocks. Can the AI ​​newcomer join the “Magnificent Seven” by 2030? Let’s take a closer look and find out.

AI Software for Commercial and Government Customers

Palantir was founded in 2004 as a big data and analytics software platform. Its goal was to sell innovative and modern software solutions to government agencies and the Department of Defense. At the time, many Silicon Valley companies were hesitant to get involved in certain government-related work because some viewed it as politically difficult. Palantir’s willingness to work with the government at the time proved advantageous. This was a huge opportunity to modernize software and analytics platforms for the United States and its allies. Palantir’s government segment now generates $1.27 billion in revenue on an annualized basis.

After joining government agencies, Palantir decided to start selling its analytics programs to large commercial customers. It now has 427 commercial customers, compared to just 49 at the end of 2020. In recent years, the company has invested heavily in its artificial intelligence platform (AIP) to further advance its platform for its large customers.

I’m not going to pretend to understand how these AI tools work, but the technology departments at all these companies and government agencies seem to like them. Palantir now has 554 total customers, up from 139 at the end of 2020. These customers value Palantir’s software platform, which should help win more customers around the world. This, in turn, can drive revenue growth for years to come.

Stronger growth, profits finally arrive

Speaking of revenue, Palantir last quarter reported strong financial results. Sales increased 21% year over year to $634 million, driven by U.S. commercial revenue growth of 40% year over year. The company also increased its number of customers by 40% year over year, which is a good indicator of future revenue growth.

Another positive thing about Palantir is the fact that it is growing while generating profits. A few years ago, Palantir had a operating margin minus 100%. Over the past 12 months, it has posted a positive margin of 8% which continues to grow. With extremely high gross margins, I would expect Palantir’s net profitability to be quite healthy once it matures.

Will Palantir Stock Join the “Magnificent Seven” by 2030?

PLTR Earnings Chart (TTM)

Could this be a big tech headline?

There’s a lot to like about Palantir. However, bullish investors need to be realistic about whether this company will soon become a tech giant. It’s just not a big enough business financially.

Palantir had $2.3 billion in revenue over the past 12 months. Revenue has grown at a rate of 30% since 2018. Let’s say the company can grow at a rate of 30% by 2030. With these estimates, Palantir will likely generate $18 billion in revenue annually by 2030 . Not bad. However, many of these large technology companies generate annual revenues in excess of $200 billion. Today. Alphabet achieved $318 billion in sales over the past 12 months while Microsoft made $237 billion, all with strong gross margins like Palantir. That’s more than 10 times what Palantir could generate if revenue continued to grow at a 30% rate for seven consecutive years.

Can Palantir be a good stock to own for the long term? Of course, it’s possible, provided revenue grows quickly and generates healthy profits. But it’s not a big tech stock.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Brett Schaefer holds positions at Alphabet. The Motley Fool holds positions and recommends Alphabet, Microsoft and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Will Palantir Stock Join the “Magnificent Seven” by 2030? was originally published by The Motley Fool

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