By Palantir Technologies Inc. (NYSE: PLTR) has once again captured investor attention with a stellar Q3 earnings report.
The company reported $725.52 million in revenue, a 30% year-over-year increase, beating the consensus estimate by $21.83 million.
Non-GAAP EPS also exceeded expectations, coming in at $0.10 versus the anticipated $0.09.
This impressive performance catalyzed a remarkable 20% surge in Palantir’s stock price as the market opened on November 5.
The company’s strong earnings were fueled by the rapid adoption of its Artificial Intelligence Platform (AIP), which continues to see heightened demand across both government and commercial sectors.
The company closed 104 deals exceeding $1 million, contributing to a 39% year-over-year increase in customer count.
Notably, US commercial revenue saw a significant 54% uptick, indicating a strategic shift towards greater private-sector engagement.
Palantir stock: analyst upgrades, evolving sentiments
The earnings beat and promising outlook prompted swift reactions from analysts. Wedbush upgraded its price target to $57 from $45, citing increased confidence in Palantir’s AI-driven growth.
The analysts emphasized the game-changing potential of Palantir’s AIP strategy, which is expected to drive enterprise adoption over the next 12 to 18 months.
On the other hand, Morgan Stanley withdrew its Underweight rating, acknowledging the strength of the company’s accelerating growth, particularly in the U.S. government sector, which posted a 40% year-over-year increase in revenue.
The post-earnings surge underscores investor enthusiasm for Palantir’s growth narrative.
The company’s forward guidance further bolstered this sentiment, with Q4 revenue expected between $767 million and $771 million, well above the market consensus of $744 million.
Palantir also raised its full-year revenue forecast to between $2.805 billion and $2.809 billion, signaling continued robust demand for its AI offerings.
Palantir: business strength and financial robustness
Palantir’s financial health remains solid, with cash, cash equivalents, and short-term investments totaling $4.6 billion.
Operating cash flow for the quarter stood at $420 million, representing a 58% margin, while adjusted free cash flow reached $435 million.
This financial strength provides the company with ample resources to fuel its ongoing expansion and invest in further AI innovations.
The company’s U.S. revenue, combining both government and commercial segments, rose 44% year-over-year, underscoring its strong foothold in its domestic market.
Palantir stock valuation metrics
Despite the positive financials, Palantir’s valuation is a topic of debate. Currently trading at nearly 40 times forward sales, the stock’s premium valuation suggests high market expectations for sustained growth.
This lofty multiple positions Palantir alongside tech giants like Amazon and Microsoft during the peak of the dot-com era.
While this reflects confidence in Palantir’s AI capabilities, it also signals potential risks if growth projections do not materialize as expected.
Palantir’s Q3 performance has undoubtedly strengthened its position in the AI space, with strong financial metrics and a clear growth trajectory.
However, as we delve into the technical aspects, it’s crucial to assess whether the current momentum is sustainable or if the stock might face resistance at its current valuation levels. Let’s now explore what the technical charts reveal about Palantir’s future price movements.
PLTR: breaks above all-time highs
Following yesterday’s earnings release, Palantir’s stock has broken above its previous all-time high of $45 made in early 2021, exhibiting a strong upward momentum in place.
Source: TradingView
Considering that short-term traders who have a bearish outlook or want to initiate fresh short positions must refrain from doing so currently.
A short position must only be considered if the stock starts displaying weakness on the 1-hour charts or falls below its 50-hour moving average.
Investors who want to bet on Palantir after its stunning Q3 numbers can initiate a small long position at current levels if they fear missing out on near-term gains. However, a long position should only be considered on a pullback below $47.
The post Is Palantir stock still a buy after its Q3 surge? appeared first on Invezz
