Palantir Technologies (NYSE:PLTR) is up an incredible 163% this year and 372% over the past five years, and it’s not just by chance. From joining the S&P 500 to riding the wave of AI demand, the company has been making headlines for all the right reasons. But what exactly does Palantir do, and why is it performing so well? Let’s break it down.
What does Palantir do?
Palantir Technologies offers a suite of four software platforms designed to address various data integration, analysis, and decision-making needs. Their flagship product, Gotham, is tailored for government agencies, especially those in defense and intelligence, and specializes in data fusion and analysis. Foundry, on the other hand, is designed for corporate clients and helps them centralize, clean, and analyze their data. Apollo serves as the underlying infrastructure for both Gotham and Foundry, managing software deployment and updates. Finally, Palantir Artificial Intelligence Platform (AIP) enhances AI-driven decision-making capabilities across the entire product suite. These platforms leverage artificial intelligence, advanced analytics, and machine learning to transform raw data into actionable intelligence, empowering organizations in sectors like finance, healthcare, and national security to tackle complex challenges and make informed decisions.
Why Palantir is doing so well?
Palantir has had an impressive year, and it’s easy to see why. One of the biggest moments was when the company joined the prestigious S&P 500 index on September 23, 2024. This move gave Palantir a lot more visibility and brought in a wave of new investors, causing its stock to jump by 13-14% right after the announcement. While joining the S&P 500 often brings short-term gains, Palantir’s inclusion shows just how important it's becoming in the fast-growing AI space.
But it’s not just about being in the S&P 500—Palantir’s financial results are strong too. In Q2 2024, the company’s revenue grew by 27% compared to last year, hitting $678 million. Its U.S. commercial business saw a huge 55% revenue jump, while its U.S. government revenue grew by 24%. Palantir also expanded its customer base by 41% and locked in 27 deals worth over $10 million.
A big driver of Palantir’s success is its focus on AI, and as the demand for AI solutions continues to rise, Palantir is perfectly positioned to take advantage of it. The company’s U.S. commercial customer base grew by 83%, showing just how much interest there is in its AI-powered tools. On top of that, Palantir keeps landing big government contracts, like a $178.4 million deal with the U.S. Army, which strengthens its role as a leader in AI and data analytics.
With a GAAP net income of $134 million and $4.0 billion in cash reserves, Palantir is well set to keep thriving as both the tech and government sectors continue to rely more heavily on AI.
Should you invest in Palantir?
It’s tough to say whether Palantir is a good investment for you without diving into your personal goals and how much risk you're comfortable with. While AI is hot right now and Palantir has a strong presence in the field, competition is heating up, and things can change quickly. Even if interest rate cuts might look good for the market, it's important to dig deeper into Palantir’s operations and financials.
Remember, just because Palantir has done well in the past doesn’t mean it will in the future. Take the time to do your homework—read the company’s reports or check out reliable third-party research. And don’t get too caught up in the buzz on social media. Make sure your decision is based on solid information!
Betting on or Against Palantir with ETFs
If you've done your research and are feeling extra bullish on Palantir, and you're open to taking on higher risk, there are leveraged options to consider. European investors, for instance, can explore the Leverage Shares 3x Palantir ETP Securities (LON:3PLT), designed to deliver three times the daily returns of Palantir’s stock through the use of borrowed capital. So, if Palantir goes up 1% in a day, the ETP jumps 3% (before fees), but if it drops by 1%, the ETP will fall by 3%.
This ETP trades just like a stock, offering amplified returns while capping your potential loss at your initial investment. But keep in mind, leverage can magnify losses just as fast, and the daily rebalancing might produce unexpected results over longer periods. This is best suited for experienced investors who can actively track their positions. Always read the prospectus carefully to understand the risks before jumping in.
On the flip side, if you believe Palantir’s stock is going to drop, there’s also an option to bet against it. Leverage Shares offers the Leverage Shares -1x Short Palantir ETP (LON:SPRE) (SPRE), which aims to deliver the opposite of Palantir’s daily performance. In simple terms, if Palantir’s stock falls by 1% in a day, this ETP goes up by 1% (before fees). But if Palantir’s stock rises by 1%, the ETP will drop by 1%.
This product holds short positions on Palantir and is designed to benefit when the stock declines. Just like with leverage, it's important to understand the risks and fees involved before investing.