Palantir, soared 23% with record high profits! "We are at the center of the AI revolution" [Earnings Summary]

The earnings report for the July-September period announced after the previous day's closea record high profit.the guidance for the October-December periodalso exceeded market expectations, and the companysaw a surge in buying interest. Alex Carp, the CEO of the company,revised upward the full-year revenue outlookand expressed the following in a letter to investors.

「The world is now in the midst of a USA-led AI revolution, with industries and economies being rebuilt. We are at the center of it.」

Earnings Highlights
Performance for July-September quarter: Beats financial estimates
◇Adjusted Operating Profit: A 69% increase from the same period last year to 0.2755 billion dollars, market expectation is 0.2361 billion dollars
◇Net profit: Expanded to a record high of $0.144 billion, double the same period last year.
◇Adjusted EPS(Earnings per share): $0.1, market estimate is $0.09
◇Revenue0.7 billion25.5 million dollars, a 30% increase from the previous year, market expectations of 0.7 billion3.7 million dollars.

Guidance for the October-December quarter: above financial estimates.
◇Revenue: $0.767 billion to $0.771 billion, market estimate is $0.7465 billion.
◇Adjusted operating profit: from $0.298 billion to $0.302 billion, estimate is $0.2616 billion.

Full-year financial estimates for 2024: upward revision, expected to exceed expectations.
◇Raised the midpoint of the full-year revenue guidance to 2.87 billion dollars (+26% year-on-year), surpassing the market expectation of 2.76 billion dollars.

About Palantir
A major American AI software company. Primarily providing AI software to the US government and private enterprises. Listed in November 2023 and became part of the S&P 500 index in September 2024.

Management's comments
◇"This is just the beginning." - The first words spelled out by CEO Alex Karp in a letter to investors.
◇"The business growth is accelerating in response to the unwavering demand for cutting-edge AI technology from the US government and private customers, surpassing financial estimates."
◇"The world is currently in the midst of the US-led AI revolution, with industries and economies being reshaped. We are at the center of it."

Analyst ratings (from Bloomberg)
After the earnings reports, there was a noticeable increase in the target stock prices set by analysts as compared to before the earnings reports.The increase rate of the average target stock price(As of November 6), 15%It was.

However, many analysts continue to maintain a 'sell', 'underperform', or 'hold' on their investment recommendations. The high valuation of Palantir is believed to be the reason. For example, in a report after the previous earnings announcement, Citigroup stated that '(good performance) is fully reflected in the richest stock price in the software industry'. While Morgan Stanley stated that 'the trendline persisting until this quarter is stronger than expected and highlights the positioning of their AI', it remains 'unrated for investment evaluation'.high valuationis believed to be the reason behind.

Valuation
The 12-month forward price-to-earnings ratio for Palantir as of November 6th is 115 times, significantly surpassing the 62 times average for the past 2 years and the 87 times average for the past 5 years. The average estimated PE ratio for the software industry group is about 50 times. It can be said that in order for the company to maintain its high valuation, it will need to continue delivering strong performance in the future.(Note: JSR, excluding the chemical sector constituents of the Nikkei Semiconductor Stock Index (in weight order). Operating profit growth rate forecast, recent dividend yield, and analyst target stock price for Nippon Chemicals are based on Bloomberg data.)The 12-month forward price-to-earnings ratio is 115 times as of November 6th.It is 115 times.It is currently 62 times the average of the past 2 years, significantly exceeding 87 times the average of the past 5 years. The average forecast PER for the software industry group is about 50 times. It can be said that in order to justify and maintain the high valuation of the company, it will be necessary to continue to achieve good performance in the future.