Palantir Leader In 'Rapidly Emerging, Diverse Enterprise AI Market,' Says Analyst, But Prefers To Stay On Sidelines: Here's Why

Data analytics company Palantir Technologies, Inc. PLTR, which owns a proprietary artificial intelligence platform, AIP, is a great AI play, said an analyst at Northland Capital Markets.

The Palantir Analyst: Michael Latimore initiated Palantir shares with a Market Perform rating and a $35 price target, suggesting merely an 8% upside from current levels.

The Palantir Thesis: Palantir’s AI operating system, powered by its ‘Ontology’ software overcomes myriad roadblocks to adoption and ignited AI use across the enterprise landscape, said Latimore in a note. “Palantir doesn’t just automate insight creation, but also decisions – the next wave of AI,” he said.

Palantir’s platform, the analyst said, produces AI at scale, leading to compounding value instead of compounding complexity. The company eases access to and use of siloed, disconnected data that enterprises have without “expensive rip and replace” processes, he said, adding “Palantir makes every company’s data great, and thus, fuels great enterprise AI.”

Tracing the evolution of AI, Latimore noted that the first advancement involved computers recognizing basic anomalies in data, the next incremental value came from automated insights and the third step was automated decisions. “Palantir elevates all three AI areas for a company, and greatly advance decisions,” he said.

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The analyst noted that AI drives material efficiencies, new revenue sources and security, with the addressable markets growing at a 30%+ rate. Use cases will likely expand over time within the companies, he added.

Palantir is a “way to invest in the rapidly emerging, diverse enterprise AI market,” the analyst said, adding that the company’s enterprise segment is accelerating, helping to propel the entire business, which currently depends on governments for 50% of its revenues.

“We estimate Palantir to hit 59 on the rule of 40 in FY24 and 57 in FY25. This top tier metric suggests PLTR should be able to trade at 22x revenue in a year, putting the stock at $35,” the analyst said.

The analyst said he would look to buy this enterprise AI leader on dips.

In premarket trading, Palantir rose 0.21% to $32.61, according to Benzinga Pro data.

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