Palantir Stock Nearly Doubles In May — But Analyst Still Thinks It's 'Contentious' AI Play

Palantir Technologies, Inc. PLTR shares have soared 90% since the start of May. The data intelligence software provider's fairly strong first-quarter results and guidance for continued profitability for the remainder of the year provided some lift to the stock.

But much of the upside came on the back of the company swearing by artificial intelligence — the hot-and-happening technology currently.

An analyst at RBC Capital Markets Rishi Jaluria thinks Palantir abysmally falls short as an AI company.

What Happened: Many companies are talking themselves up as potential beneficiaries of generative AI, said Jaluria in an interview with CNBC's Street Signs. "We think they are actually going to be hurt by it," he said, bringing up the names of Palantir and Asana, Inc. ASAN.

The analyst called upon investors to be very skeptical about "what are these companies actually doing around generative AI? Do they have the right positioning? Do they have the right data?"

See Also: Best Artificial Intelligence Stocks

He called  Palantir a contentious one. The company has benefited from positioning itself as an AI company both investors as well as chief investment officers, Jaluria said. "The issue is generative AI technology is so far ahead of what knowledge you can do and a lot of use cases," he added.

AI is now so democratized, the analyst said, adding that even "our parents can use ChatGPT and see the power that this has."

That will expose Palantir as not truly AI in the same way as a lot of these generative AI systems, Jaluria said. He also noted that Palantir is a 30% services company. Generative AI helps the software to be more customized to the end user and that makes the heavy customization of Palantir unnecessary, he added.

"Palantir right now is actually benefiting from the perception of the market of it being an AI company but in reality long term we think they’re going to be hurt by the rise of generative AI," Jaluria said.

AI Beneficiaries: Jaluria also mentioned companies that can truly ride on the generative AI momentum. Salesforce, Inc. CRM is one of the biggest beneficiaries, given it has so much enterprise momentum and so much data, the analyst said.

Salesforce will be able to see some benefits, not to the extent of Microsoft Corp. MSFT but some benefits, the RBC analyst said. He also said HubSpot, Inc. HUBS and MongoDB, Inc. MDB will likely capitalize.

Palantir ended Tuesday's session 7.77% higher at $14.71, according to Benzinga Pro data.

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