Technology Sector Ideas

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>>> Palantir Technologies -- Shares of Palantir Technologies (NYSE: PLTR) are up 63% over the last year due to growing demand for its enterprise AI software platform. A growing number of U.S. companies are turning to Palantir to use AI models with their data, which could be the start of a long stretch of high growth.

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Palantir is used for a variety of use cases, including military operations, supply chain analysis, and investigating financial crimes. The U.S. government made up over half the company's revenue last quarter, which validates the capabilities of Palantir's technology, but government spending can also be a two-edged sword considering the potential for budget caps.

However, Palantir is starting to see momentum in diversifying away from the government. U.S. commercial revenue grew 40% year over year last quarter to $150 million and accounted for nearly a quarter of Palantir's business. Management expects U.S. commercial revenue to be up 45% in 2024 over 2023 and expects this segment to remain a significant growth driver over the long term.

Another positive indicator is that management is seeing a significant shortening in deal cycles. Some customers are signing deals just days after trying the product. To capitalize on the growing demand, management wants to broaden the market for its offering outside the U.S., in addition to state and local governments, researchers, and academic institutions.

It's clear Palantir has only just begun to tap its potential. The company reported a record net profit of $106 million in Q1 on $634 million of revenue, and Wall Street analysts currently expect the company to grow earnings at an annualized rate of 22% over the next several years.

As demand for AI software takes off over the next decade, Palantir shares should be a very rewarding holding for patient investors.

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