PLTR

Is Palantir Technologies Stock Going to $25? 1 Wall Street Analyst Thinks So.

There's no denying that Palantir Technologies (NYSE: PLTR) has been a beneficiary of the secular tailwinds of artificial intelligence (AI). The company's data analytics and AI systems serve U.S. government and enterprise business clients alike. However, concerns about one metric in Palantir's financial results sent fair-weather investors to the exits.

One Wall Street analyst believes it's much ado about nothing.

Slowing growth? Not so fast.

Citi analyst Tyler Radke boosted his price target to $25 on Palantir stock while maintaining a neutral (hold) rating on the shares. For those keeping score at home, that represents potential gains for investors of 18%, compared to Thursday's closing price. The analyst cited "solid upside," as evidenced by Palantir's results.

The analyst has clearly done his homework. In the first quarter, Palantir's revenue grew to $634 million, up 21% year over year, resulting in adjusted earnings per share (EPS) of $0.08, which surged 60%. Sales were well ahead of expectations, while profits were in line with analysts' expectations.

What grabbed headlines, however, was U.S. commercial growth, which climbed 40%. While demand was strong, it marked a deceleration from 70% growth in the fourth quarter, which caused short-sighted investors to tap out.

Taken in a vacuum, that might be reason for concern, but investors who dug a little deeper found this nugget: Management increased its guidance for the U.S. commercial segment from 40% growth to 45% growth for the full year, suggesting there's more to come, though growth may be lumpy.

The analyst pointed to "record" new customer additions as further evidence of good days ahead. I believe the analyst hit the nail on the head. U.S. commercial customers grew 69% year over year, though that would have been spread out during the quarter.

Not every new customer will have had a chance to attend one of Palantir's boot camps to customize its Artificial Intelligence Platform (AIP) to their needs. This onboarding program helps users deploy AI to solve business-specific problems.

The adoption of AI will take years to unfold, and Palantir's AIP helps businesses get AI done.

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Danny Vena has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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