Palantir (NYSE:PLTR) was initiated with a Market Perform rating and $35 price target by Northland Capital Markets in a note Thursday.
The firm said the company is emerging as a key player in the rapidly evolving enterprise AI landscape, according to a recent report by Northland Capital Markets.
Northland highlights Palantir’s AI operating system, powered by its Ontology software, as a solution that addresses the fragmented and experimental nature of current AI initiatives within companies and government agencies.
Northland notes that while many organizations are experimenting with generative AI (GenAI) pilots, these efforts often result in "spaghetti tech architecture" that hinders the development of more valuable AI programs.
The firm explains that Palantir's platform, however, enables AI production at scale, generating "compounding value instead of compounding complexity," making it a standout in the crowded AI field.
They add that a significant advantage Palantir offers is its ability to make enterprise data more accessible and usable without the need for expensive overhauls.
According to Northland, “Great AI comes from great data,” but many enterprises struggle with siloed, disconnected data. They believe Palantir's platform overcomes this challenge, allowing companies to leverage their data more effectively, which in turn fuels superior AI capabilities.
The report also emphasizes that Palantir is leading the charge toward the next wave of AI advancements—automated decisions. While initial AI developments focused on anomaly detection and automated insights, the complexity of automating decisions represents the future of AI.
Given the growing AI market, which is expanding at over 30% annually, Northland believes that Palantir is well-positioned to benefit from the increasing shift toward software-driven AI solutions.
"PLTR is a way to invest in the rapidly emerging, diverse enterprise AI market," they state. "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. Our DCF model indicates the same. As such, we are initiating coverage with a Market Perform and look to buy this enterprise AI leader on dips."