Here's Why Palantir Stock is a Buy Despite 26% Fall in a Month

Shares of Palantir Technologies Inc. PLTR are down 26% from their record high on Feb. 18 and have mostly traded in the red over the past month. Palantir faced a recent decline despite being the market favorite for the past year with a 266.9% surge, outpacing NVIDIA Corporation’s NVDA 33.8% gain. The stock was also the best S&P 500 performer in 2024. Image Source: Zacks Investment ResearchSo, let’s analyze the reasons behind this downturn, and why the Palantir stock is still a buy.Why is Palantir Stock Price Down in a Month?After its initial public offering boom in 2020, the Palantir stock gyrated for nearly four years. However, with the advent of artificial intelligence (AI), Palantir shares rebounded. After all, generative AI is expected to help Palantir improve its data analytics competencies. But is generative AI boosting Palantir’s growth? Before the introduction of ChatGPT, in 2020, Palantir’s revenues jumped 47%. However, last year, Palantir’s revenue growth rate slowed to 29%, suggesting generative AI didn’t significantly benefit Palantir, and the stock remained susceptible to unwarranted events.Thus, when President Trump signed executive orders in the Oval Office last month, including a plan to reduce the defense budget by 8% annually for five years, the Palantir stock was undesirably impacted. This is because government clients in the United States constituted about 42% of Palantir’s revenues in 2024.Reasons to be Bullish on Palantir StockDespite the recent setbacks in share price, there are many reasons to remain optimistic about the Palantir stock. The company’s revenues in the fourth quarter jumped 36% from a year ago, and if Palantir sustains this growth, its revenues could nearly double in two years.In the fourth quarter, Palantir’s revenues improved, banking on an uptick in customer base. The company increased its customer count by 43% from a year ago. Further, Palantir’s expansion into the private sector beyond government clients will continue to boost its revenue growth. For the current year, Palantir expects its revenues to increase 31% year over year, way more than Wall Street estimates. Palantir’s remaining performance obligation in the quarter ending on Dec. 31, 2024, exceeded the present revenue growth, indicating strong growth soon. High demand for Palantir’s Artificial Intelligence Platform (AIP) highlights expansion opportunities as it automates tasks beyond human capabilities. AIP’s popularity has drawn both existing and new customers. Most importantly, with existing customers driving business, Palantir needs to spend less on revenue generation, thus boosting growth margins and potentially increasing the company’s market capitalization.Palantir Stock is a Must-Buy NowWith Palantir’s shares well-poised to eventually gain strength in the near term, banking on an increase in customer bases and AIP’s acceptance, it is worth buying the stock now. If the firm establishes itself in the expanding generative AI market, PLTR’s stock price may significantly increase over the next decade.Palantir, rightfully, has a Zacks Rank #2 (Buy), with an expected earnings growth rate of 36.6% this year. The Zacks Consensus Estimate of 56 cents for PLTR’s earnings per share (EPS) is up 40% from a year ago. Image Source: Zacks Investment ResearchYou can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NVIDIA Corporation (NVDA): Free Stock Analysis Report Palantir Technologies Inc. (PLTR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks