While several tech giants have been hit by the crushing hype around AI, Palantir Technologies is a beneficiary of AI and will remain so, according to Bank of America. Analyst Mariana Mora reiterated her buy recommendation on the data analytics company and raised her price target to $30 from $28, suggesting a 24.5% upside potential from Monday’s closing price. “The market, industry and investor attitudes towards AI are similar to the California Gold Rush,” Mora wrote in a client note on Tuesday, adding that the “AI rush” seems to have dried up given the recent sell-off in tech stocks. “Just like with the Gold Rush, the real beneficiaries were the entrepreneurs behind the rush. It is in this respect that entrepreneurs, the purveyors of the digital axe, remain PLTR’s biggest beneficiaries, even as the AI tourists start to leave,” the analyst added. Palantir rose 11% on Tuesday after it raised its 2024 revenue forecast and reported its biggest quarterly profit ever, rekindling investor confidence in the generative AI boom. The software company also issued a better-than-expected third-quarter sales outlook. The stock is up more than 57% this year. Mora updated Palantir’s forecast to back the company’s better-than-expected momentum in attracting U.S. commercial and government customers. Analysts noted that Palantir’s second-quarter commercial revenue was up 55% year over year, defying concerns about IT capex constraints. She attributed the growth to Palantir’s bootcamp go-to-market strategy to attract customers, which involves helping companies find useful AI use cases and implementation plans within shorter timeframes. Mora said she expects the company to get more tailwinds from this strategy, as more than 1,000 companies have already joined Palantir’s bootcamps in a year. She also remained optimistic about Palantir’s government business. “Enhanced data, connectivity and interoperability will define a new era for defense, and PLTR is well positioned,” the analyst said. Mora noted that Palantir recently won an Open DAGIR contract from the Chief Digital and Artificial Intelligence Office (CDAO), strengthening its ability to extend AI capabilities to the Defense Department across domains such as space, cyber, electronic warfare and logistics. Open DAGIR stands for Open Data and Applications Government-Owned Interoperable Repository, and refers to an initiative announced in May that invites software developers to create new applications for combatant commands. CDAO’s AI initiative is still in its “early stages,” she said, and expects Palantir to continue to win new awards from the U.S. government. Morgan Stanley noted on Tuesday that Palantir’s “deep technical expertise” is a valuable asset, but that the company’s value is already reflected in its premium valuation multiple. The firm maintained its underweight rating and $20 price target on the stock. Deutsche Bank similarly maintained a wait-and-see stance, reiterating its sell rating on the stock in a note on Monday and saying the company’s shares are already among the most expensive, if not the most expensive, software stocks.
This tech stock is enabling the ‘AI gold rush,’ says Bank of America
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