PALANTIR

Shortly after joining the S&P 500, Palantir performed well in the third quarter earnings report, much to the surprise of investors, and its stock price soared 20%. CEO Alex Karp attributed this success to the company's demand for artificial intelligence “AI” products, which bodes well not only for Palantir, but for the AI industry as a whole. The company demonstrated the value of AI in the real world, which justifies the large capital investment in “AI.” Strong performance in the third quarter surpassed Wall Street expectations. The company's third-quarter revenue reached 0.725 billion US dollars, easily exceeding analysts' estimates of $0.703 billion, an increase of more than 27% over the previous year. Revenue has been growing steadily, but this time the 27% increase is the biggest since mid-2022. What is truly amazing is Palantir's ability to increase efficiency. Its profit margin increased nearly 20% month-on-month and 275% year-over-year. This meant that earnings per share (EPS) also increased significantly, up 80% year over year. Earnings per share is one of the most important metrics for investors. Palantir's commercial segment is growing rapidly, and while government contracts remain central to Palantir's success, US commercial customers have injected strong impetus into its growth. Its commercial segment revenue increased 54% year over year, and the company expects its commercial revenue to increase 50% compared to 2023 by the end of 2024. This is because the market demand for advanced AI applications is increasing, and Palantir's products help companies turn data into actionable insights, thereby improving their profitability. The company's success is due in part to its recently launched new sales program**, which uses bootcamps to attract potential customers. Through training camps, customers can experience first-hand the usefulness of Palantir products. This strategy stems from Karp's confidence in his product, which he believes is good enough to sell himself. So far, it seems that this strategy is actually working. In addition to being highly effective, this strategy is also highly cost-effective. The traditional approach is usually to set up a technical sales and customer success team, but this approach is time-consuming and costly. However, although training camps are not cheap, they are relatively more cost-effective and can be adjusted flexibly, and do not require the recruitment or dismissal of large numbers of personnel. This is part of Palantir's ongoing efforts to improve the company's efficiency and increase profits. The biggest problem Palantir faces is valuation, which is currently very high, even among high growth companies. Its price-earnings ratio (P/E) exceeds 260. By contrast, Nvidia's price-earnings ratio of 66 is already considered high, while Alphabet's price-earnings ratio is 22. Although Alphabet and Nvidia are both more established companies, Nvidia is actually growing faster than Palantir. Looking at the price-earnings ratio alone, there seems to be a problem with Palantir's valuation. To better consider growth, we can use the PEG ratio (price-earnings ratio to growth rate). Generally, PEG below 1 is considered ideal, while more than 2 is less ideal. Palantir has a PEG ratio of 2.2, while Nvidia and Alphabet both have a PEG of 1. Although valuation is not the only measure of a company's value; the actual value of a stock ultimately depends on the price the market is willing to pay for it, but I think this may have an impact on stock prices in the future. I expect Palantir to continue to be successful and increase revenue over the next three years, but I'm not sure if its growth rate will continue to support such a high valuation.

These are just my own opinions and opinions... don't take it too seriously 🤗 Of course I also hope you can share your opinions with me..

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