Big data companies Palantir Technologies (NYSE:PLTR) has certainly been among the top AI stocks that investors have invested in during the recent cycle. Impressively, PLTR stock is up 65% so far in 2024. With the help of its new AI platform and strong focus on working with the U.S. government, Palantir has strong growth potential, which makes many investors invest in this stock. In addition, its customer base has grown 79% since 2022, adding 220 more new revenue streams. Favorable tax conditions and rising relevance increase its investment appeal.

Following an impressive second quarter (Q2) earnings report, PLTR stock rose and nearly reached its 2021 high. The company also has more upside due to continued appreciation, making it a risky bet for short sellers. While these risks remain, the outlook for Palantir remains bullish, making it a buy.

Impressive results in the second quarter of 2024

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As mentioned, PLTR shares soared after Palantir announced second-quarter expectations, prompting the company to raise its guidance. Revenue reached $678.13 million, net income reached $134 million, and the company generated earnings per share of 6 cents. All of these metrics were above what many analysts had initially expected.

Palantir CEO Alex Karp highlighted strong demand for its software and services segment as the reason for these results. In particular, commercial revenue reached $307 million. US sales also increased by 55% to $159 million. Palantir reported revenue of $634 million for the first quarter of 2024, up 21% year over year. The AI ​​platform and strong commercial growth in the US were the reasons for this increase. With 41 new US commercial customers and GAAP operating income of $81 million, Palantir seems to be set for further growth in the future. Despite European hurdles, Palantir is optimistic about global AI demand.

In 2023, all indices experienced a significant recovery due to AI interest. The trend continued in 2024, with the Nasdaq by 18% and the S&P500 saw a 15% increase. Palantir was one of the standout performers, rising 66%. Wedbush Securities analyst Dan Ives predicts further gains and sets a price target of $50, suggesting a potential upside of 75%.

Analysts rate PLTR a Buy with a $29 target, suggesting strong future profitability and cash flow.

Annual sales and profit targets raised

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On Monday, Palantir proudly announced that it had again raised its revenue and profit forecast for the year due to strong demand for AI. Shares rose 12% in extended trading, adding to the 39% year-to-date gain. In addition, the company reported its highest quarterly profit since then and forecast third-quarter revenue to come in above forecasts.

Palantir’s AI platform, which is critical to the development of GenAI technology, led to an increase in revenue guidance to $2.74 billion to $2.75 billion, beating previous estimates. Adjusted earnings forecasts rose to $966 million to $974 million. Despite a recent 9% share price decline following mixed earnings from Big Tech companies, the updated forecasts eased investor concerns.

Palantir Chief Revenue Officer Ryan Taylor highlighted the company’s role in bridging gaps between AI prototypes and customer-ready products. The commercial sector in the US saw a 55% increase and third-quarter revenue guidance beat estimates. Palantir reported adjusted earnings of 0.09 cents, beating the estimate of 0.08 cents.

Founded in 2003, Palantir is used in many aspects of the U.S. military. The company’s annual government revenue rose 33% to $307 million, in line with analysts’ expectations. Government revenue also beat forecasts, reaching $371 million in the June quarter, up 23%.

Strong growth story

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Palantir’s growth story, which has been front and center since September 2020, has been driven by its expanding commercial sector. Heading into 2024, the company showed significant acceleration due to strong commercial growth in the US and its AI Platform (AIP) leveraging advanced AI and ML tools. First quarter results showed continued momentum in AIP and commercial revenue in the US, with government revenue growing 16% year over year.

Since its launch, Palantir’s AIP has been in high demand. The company offers a free trial with user and ontology limits. Management reported strong interest, noting that over 915 organizations have participated in AIP bootcamps, up from 560 in February. They also observed faster contract cycles, including a seven-figure contract signed within days of a bootcamp. Quarterly closes have accelerated, although many are on the lower end, ranging from $1 million to $5 million.

PLTR stock still looks like a buy

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Despite minimal share price movement since the company’s recent strong second-quarter earnings report, investor confidence is strengthening. This growth is being driven by increasing demand for generative AI solutions, with companies looking to integrate large language models. Microsoft CEO Satya Nadella noted this trend and highlighted the increasing use of Palantir alongside large enterprises.

The expected double-digit growth of the generative AI market suggests that Palantir’s expansion is just beginning. Recent contracts and increased military investments, including AI projects and the development of the Army’s first AI-defined vehicle, underscore the U.S. government’s commitment to AI and its ongoing partnership with Palantir.

As of the publication date, Chris MacDonald did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.

At the time of publication, the responsible editor had neither directly nor
indirectly) positions in the securities mentioned in this article.