Palantir raises revenue target on AI boost

August 10, 2023: On Monday, Palantir Technologies raised its revenue target as it visits an option to commercialize A.I., but not all judges are convinced.

On Monday, CEO Alex Karp said Palantir aims to make money from A.I. instead of merely producing tools that compose computer-generated poetry. Some companies have restricted employees from using tools like OpenAI’s ChatGPT.

“We will figure out how to monetize it,” Karp said, referring to Palantir’s artificial intelligence platform, AIP. According to the company’s website, AIP will permit businesses and defense and military organizations to tap big language models and A.I. to aid decision-making.

Dan Ives, managing director at Wedbush Securities, is bullish on Palantir’s A.I. ambitions. On Monday, the firm stated, “A star is born,” referring to AIP.

“That’s probably the best pure-play A.I. name, in terms of them monetizing not just on the government side, but on the enterprise side when it comes to A.I.,” said Ives on CNBC’s “Street Signs Asia” on Tuesday. Palantir recently announced it was awarded a five-year contract worth up to $463 million from the U.S. Special Operations Command.

“And I think we saw this as an inflection point quarter, where this remains, in our opinion, one of the core A.I. names over the coming years,” said Ives.

In the note, Wedbush said, “The company is engaging with 300+ enterprises to deploy AIP, all searching for an efficient and secure solution to adapt the latest LLMs for use on internal systems and proprietary data.”

“Based on the strong performance and the A.I. arms race well underway, we continue to believe Palantir is the gold standard in A.I.,” Wedbush said. The firm maintained its outperform rating and $25 price target, representing roughly 39% upside from the stock’s Monday close of $17.99.

Rishi Jaluria, managing director at RBC Capital Markets, disagreed and said Palantir is “worth substantially lower.” The firm has an underperform which rates on the stock and a $5 price target, which implies a downside of about 72% from Palantir’s Monday close.

“This is not truly a generative A.I. company. When we look at Palantir and based on our conversations with [industry observers and Palantir’s employees], this does not appear to be anything truly differentiated when it comes to generative A.I.,” Jaluria said on Tuesday.

“This feels like the same Palantir services and technology they’ve been selling, which has value. They’re not adding a tremendous amount of value to be a leader in generative A.I., even though they are positioning themselves as such in front of the investment community and even in front of CIOs and CEOs,” said Jaluria.