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Shares in Palantir Technologies surged as much as 15 per cent in after-hours trading on Monday as Peter Thiel’s data analytics group reported record quarterly income and raised its revenue forecast, citing high demand for its artificial intelligence software.
Palantir shares have risen 140 per cent this year, adding about $60bn in market value. It means it now trades at more than 100 times future earnings, making it the most expensive software stock on the market.
The Denver-based company said on Monday that revenues for the third quarter climbed 30 per cent to $725.5mn, far higher than the $703.7mn predicted by analysts. Net income rose to a record $144mn.
Revenues from its US commercial business grew 54 per cent to $179mn, while its US government business grew 40 per cent to $320mn.
Palantir was founded in 2003 by tech investors including Thiel and Alex Karp, its chief executive, to provide data governance and analytics to US federal intelligence agencies. Its AI software is now used by global organisations such as energy giant BP and the UK’s National Health Service, although its largest customer remains the US government.
The group has become a marquee stock for the AI investor frenzy as well as a so-called meme stock among retail investors who follow Karp’s proclamations on patriotism and national defence. Its share price was further boosted by its inclusion in the S&P 500 in September.
“The growth of our business is accelerating, and our financial performance is exceeding expectations as we meet an unwavering demand [for AI tools],” Karp wrote to shareholders on Monday. “The world is in the midst of a US-driven AI revolution that is reshaping industries and economies, and we are at the centre of it.”
Wall Street has grown cautious over Palantir’s lofty valuation which has given it a far-larger premium than other tech groups benefiting from the AI boom, such as Oracle and Microsoft, which trade at less than 30 per cent of earnings. “We cannot rationalise why Palantir is the most expensive name in software,” RBC analysts wrote in a note last week.
The company said in March that interest in its new AI tools — which help corporate, government and military customers analyse data and use it to make decisions — was at unprecedented levels and had attracted big new customers including CBS Broadcasting and General Mills.
On Monday, Palantir raised its revenue guidance for 2024 to about $2.81bn, beating analyst expectations of $2.76bn. It also said revenue from its US commercial business would climb more than 50 per cent this year to more than $687mn.
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