Famed CNBC pundit Jim Cramer has been bullish on Palantir Technologies Inc (NYSE: PLTR) for some time.
Speaking with a caller, the Mad Money host recommended investing in the data analytics company as it has “unbelievable technology” and projected a more than 25% upside in its (then) share price to $28.
The former hedge fund manager turned pundit was accurate in predicting a material increase in Palantir stock, currently trading at $37.
But a 60% rally over the past five months questions if it’s already too late to build a position in Palantir Technologies. Well, not really, as per Bank of America Securities analyst Mariana Perez Mora.
24/7 Wall Street Insights:
- Mad Money host Jim Cramer recommended buying Palantir stock on April 12th
- He was right in predicting a significant upside in shares of Palantir Technologies
- Here’s why Palantir share price could continue to push up in the months ahead
- Dividend stocks have a history of offering stable returns during economic slowdowns. Grab a free copy of our “7 Things I Demand in a Dividend Stock” report that also reveals the top two must-own dividend stocks for 2025
She raised her price target on PLTR shares in a recent note to $50, which suggests a potential upside of another 40% from here.
Palantir Stock is a Notable AI Beneficiary
Palantir Technologies was founded in the wake of 9/11. The U.S. intelligence agencies started using its proprietary software in the early 2000s to analyze data and identify patterns that could help intercept terrorist activities.
The tech company has since evolved into an AI leader with the launch of its Artificial Intelligence Platform (AIP), which helps organizations securely integrate AI capabilities into their existing operations and workflows.
In August, PLTR cited artificial intelligence tailwinds as it raised guidance for the full-year revenue to $2.74 billion to $2.75 billion. Consensus estimates, at the time, stood at $2.70 billion, as per LSEG.
Mariana Perez Mora is bullish on Palantir stock also because it’s as well positioned for long-term growth as Apple in its early days.
“Early estimates failed to anticipate the world of apps, streaming, smart devices, and ultimately how this new product would bring the first trillion-dollar company,” she told clients in a research note on September 10th.
Palantir has an edge over rivals as it offers tailored solutions that deliver added value to customers. Such an unconventional approach equips this NYSE-listed firm with exceptional pricing power.
A 12% year-over-year increase in adjusted operating margin to 37% in its latest reported quarter further demonstrates just how effective that strategy has been for Palantir Technologies, according to BofA’s Mora.
Why Else Should You Buy PLTR Shares?
PLTR has historically generated most of its revenue from federal government contracts, which makes it well-positioned for a looming economic slowdown as governments and large enterprises tend to be more resilient amidst a challenging economic backdrop.
Jim Cramer had also attributed his bullish Palantir Technologies price prediction partly to strength in the company’s government revenue on April 12th.
But Palantir stock is worth owning also because its management is committed to diversifying the customer base to unlock the next phase of growth. PLTR has been accelerating its commercial revenue that climbed 33% to $307 million in fiscal Q2.
Commercial made up 45% of the firm’s total quarterly revenue as the number of customers in that segment soared to a total of 295, up 83% year-on-year, due to “an unrelenting wave of demand from customers for AI systems that go beyond the merely performative and academic,” as per chief executive Alex Karp.
Palantir Technologies is all the more attractive due to that rapid expansion in customer base as profitability tends to hinge on the number of customers in the software industry.
Verdict
As evident, Palantir stock may warrant an investment despite its massive year-to-date rally as the company’s financial performance has been nothing short of immaculate in 2024.
The data analytics/AI company has lately outperformed its peers in the software space and a diversifying customer base delivering profitable growth suggests that trend will continue moving forward.
While PLTR may not make you a millionaire, at least in the near term, it sure looks fairly positioned to offer solid returns over the next 12 months.
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