Palantir Technologies (PLTR) has suddenly emerged as a leader in the artificial intelligence boom, alongside extraordinary growth across both its commercial and government businesses.
More recently, the company has begun to carve out a more distinct role within the AI ecosystem. While much of the industry remains focused on building increasingly powerful foundation models, Palantir is positioning itself as the layer that allows corporations and governments to actually deploy those models against their own proprietary data, and do so with an eye toward privacy and protecting intellectual property.
That distinction appears to be gaining traction. Palantir’s latest earnings report showed another major acceleration in growth, while analysts have continued to raise earnings estimates across every major period.
At the same time, PLTR shares recently broke out from a year-long technical consolidation and are now pressing against another important resistance level near $180, with strong momentum at its back.
With fundamentals, earnings revisions and price momentum all moving in the same direction, Palantir earns today’s Bull of the Day designation.
Palantir Earnings Estimates Continue to Rise
Palantir’s latest quarter reinforced just how quickly the business is expanding. Revenue surged 93% year over year, while earnings climbed 225%.
More important for the Zacks Rank, analysts responded by raising their forecasts.
Over the last 60 days, there have been 11 upward revisions to the current year earnings estimate and zero downward revisions. Earnings estimates have risen 7-8% across timeframes over the last 60 days, giving Palantir a Zacks Rank #1 (Strong Buy).
Growth expectations remain exceptional as well. Earnings are projected to increase more than 100% this year, followed by another roughly 41% next year. Longer term, analysts expect EPS to compound at approximately 55% annually over the next three to five years.
The obvious objection is valuation. PLTR currently trades at roughly 113x forward earnings, giving it a PEG ratio just above 2. That is an extremely rich multiple and leaves little room for execution problems.
However, Palantir has consistently grown into what initially appeared to be extreme valuations. If earnings estimates continue moving higher at anything close to the recent pace, the denominator in that valuation equation can change quickly.
Palantir Finds Its Place in the AI Boom
The increasingly interesting part of the Palantir story is its positioning within the broader AI ecosystem.
CEO Alex Karp has emphasized the importance of allowing companies and governments to use artificial intelligence without surrendering control of sensitive data and intellectual property. Rather than competing directly with the largest AI labs to build foundation models, Palantir is increasingly positioning itself as the infrastructure through which organizations can safely deploy those models against proprietary data.
That could prove to be a valuable position as AI moves from experimentation toward widespread enterprise adoption.
There is already evidence that customers are expanding their use of Palantir’s platform. Net dollar retention recently reached 157%, indicating that existing customers are spending substantially more with the company.
That is one of the key metrics I would continue watching. If Palantir can maintain elevated expansion rates as AI adoption broadens, it would strengthen the case that the company is becoming a critical layer of enterprise AI rather than simply another beneficiary of the current investment cycle.
PLTR Stock Sets Up for Another Breakout
The technical picture is reinforcing the fundamental story.
Earlier this month, PLTR broke decisively above the upper boundary of a large descending consolidation that had contained the stock for much of the past year. Shares quickly rallied from the mid-$140s into the $170s following the breakout.
PLTR stock has now spent the last couple weeks consolidating near its highs. Shares are currently trading around $178, with a clearly defined resistance zone near $180 and support around $170-$171.
That creates a straightforward continuation setup. A decisive move through $180 would clear the recent highs and could signal the beginning of another leg higher. Conversely, a break back below the low-$170s would suggest that the stock needs additional time to digest its recent advance.
Should Investors Buy Shares in PLTR?
Palantir is not a cheap stock, and investors buying at more than 100x forward earnings need to recognize the expectations embedded in the valuation.
But expensive stocks can remain expensive when their earnings outlook continues improving.
Palantir currently combines several characteristics I look for in leading growth stocks: rapid revenue growth, accelerating earnings, broad-based upward estimate revisions and strong relative price momentum. The company is also establishing a potentially important role as enterprises and governments move from experimenting with AI toward integrating it into their operations.
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This article originally published on Zacks Investment Research (zacks.com).