Palantir (NYSE:PLTR), a company renowned for its defense and intelligence work with the U.S. government, saw its shares surge significantly in February following its stronger-than-expected Q4 earnings report. Palantir stock is already up more than 42% since the beginning of 2024.
Investors were particularly impressed with the performance of the company’s Artificial Intelligence Platform (AIP) platform. However, a team of analysts is out today with their updated Palantir stock forecast.
Why Palantir stock is up in 2024
Like most of its tech peers, Palantir stock extended its AI-driven momentum from 2023 into this year and is already up more than 42% year-to-date. That represents a notable outperformance compared to the broader S&P 500 index, which gained around 8% during that period.
The biggest boost for PLTR stock was its earnings report for the fiscal Q4, after which the stock closed 30% higher.
The big data analytics software maker reported a 20% increase in quarterly revenue to $608.4 million, surpassing the $602.4 million predicted by analysts.
For the upcoming first quarter, Palantir forecasts revenue between $612 million and $616 million, slightly below the $617 million projected by analysts.
In a shareholder letter, the firm’s CEO Alex Karp said the demand for large language models (LLMs) "continues to be unrelenting" in the U.S.
Under Karp's leadership, Palantir has been expanding AIP, executing nearly 600 pilots using the technology in the past year.
In the aftermath of the Q4 print, Palantir stock received a series of upgrades from Wall Street analysts, including those at Citi, who raised their target price from $10 to $20.
Analysts said Palantir’s robust quarterly performance was fueled by “breakthrough momentum” in its commercial unit, though they voiced some reservations about PLTR’s conservative full-year guidance for its non-U.S. commercial sectors.
“We see these risks balanced by potential call options on new AI Monetization (AIP) and improving U.S. Government contracts into 2024,” Citi analysts wrote in a February note.
Witnessing the strong growth in Palantir’s AIP platform, Jefferies analysts also noted the company is now at an “inflection point.”
“We are impressed with AI Platform (AIP) ramping faster than our initial expectations and believe it’s appropriate to upgrade shares to reflect the momentum,” the analysts said.
PLTR stock could drop from here says analyst
As PLTR stock keeps trading near 30-month highs, some investors and analysts are concerned that the valuation is too swollen at this point. Since May last year, the stock is up about 230%.
While Jefferies analysts recently raised their rating on Palantir stock to Hold, they also noted that the stock is the most expensive one in their software research coverage.
In a note to clients on Friday morning, Phillip Securities Research analysts warned clients that the PLTR stock could slip to at least $22.30 in the near term, in case the support in the low $24s is broken.
Analysts added that PLTR shares could then extend their drop to $20.30. This translates into a downside risk of about 17%, based on Thursday’s closing price of $24.43.