Palantir shares rise on government contract news

The share price of Palantir Technologies Inc. NYSE:PLTR was sharply higher in premarket trading on March 6, 2024. The company announced that it has been awarded a two-year, $178 million contract from the US Army for its Tactical Intelligence Targeting Access Node (TITAN) program. These are mobile ground stations powered by artificial intelligence (AI) and machine learning (ML) technology.

The mission of the TITAN system is to provide real-time actionable intelligence using AI and ML modeling that can be deployed at the tactical level. Palantir’s AIP platform will provide a best-in-class solution that will lay the foundation for a scalable and adaptable solution designed for a rapidly evolving threat environment.

Why did the Army choose Palantir?

According to Akash Jain, president of Palantir USG, “This award demonstrates the Army’s leadership in acquiring and fielding the emerging technologies needed to strengthen the defense of the United States in this era of software-defined warfare…Soldiers they deserve best-in-class technology that gives them the tactical advantage on the battlefield by enabling real-time decisions at critical speeds. Palantir is honored to support this program, continue its partnership with the Army, and lead a team of partners innovative to build the next generation of capabilities.”

Put the deal into perspective

In 2023, Palantir generated just over $2.25 billion in revenue. When fully paid, this contract represents approximately 14% of the total. It’s a good start to the year, considering the company posted 18% sales growth for all of last year. The contract also represents a key step toward Palantir’s goal of becoming a dominant military contractor.

However, it’s important to note that even with the $89 million from this contract, Palantir’s projected full-year 2024 revenues of $2.65 billion to $2.67 billion would still fall short of analyst projections by 2 .8 billion dollars.

This will give the naysayers (and there are many) something to argue against. One criticism leveled at Palantir since its inception has been that it is overvalued among defense stocks and will need growth on the commercial side of its business to justify its current premium. However, Palantir doesn’t fit neatly into the category of defense stocks or artificial intelligence stocks. It is not one of many; it’s the only company that does exactly what it does.

To illustrate this, one should consider that the TITAN contract was not the only news recently reported by Palantir.

Palantir aims to demonstrate why seeing is believing

On Thursday, March 7, Palantir will host AIPCon, where more than 60 customers will showcase the work they’ve been able to accomplish with Palantir’s Artificial Intelligence Platform (AIP). During the event, which will also be live streamed on YouTube, Palantir plans to announce more than 20 new customers and partners spanning many different industries.

Palantir remains a stock that requires condemnation

All of this news takes place two months before Palantir reports earnings in May. This will give analysts ample time to consider their outlook for PLTR stock. As Thomas Hughes recently wrote for MarketBeat, analysts’ ratings should be taken with a grain of salt as they raise their price targets while maintaining an overall “Hold” rating on the stock. Furthermore, institutional investors continue to buy the shares.

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