Palantir Technologies (Nasdaq: PLTR) Started with 2025 with a bang and jumped more than 60% in just over two months at the back of a solid quarterly report that was released at the beginning of February, but the shares has witnessed a remarkable withdrawal since he had hit a highest point in 52 weeks on 18 February.
In particular, the shares of Palantir have fallen by 22% compared to its 52 weeks high. The decline can be attributed to several factors such as the overall negativity in technical shares of uncertainty caused by rates and other policies that are expected to weigh on the US economy.
And there is an increase in the chance of a recession in the US because of the possible direction that the economy is expected to take. All this explains why investors may have decided to make a profit in Palantir shares, especially after the massive profit it has achieved in the past year. Again, the expensive appreciation could be another reason behind his recent withdrawal.
Savvy investors, however, will do well to keep an eye on Palantir shares and consider buying it if it continues to take a blow. That is because the company is an enormous growth option that could increase its shares in the next five years.
Palantir published his fourth quarter of 2024 results on 3 February 3. Annual turnover landed at $ 2.87 billion, an increase of 29% compared to the previous year. What is worth mentioning is that the company’s revenue growth has been accelerated all year round. The top rule jumped by 36% in the last quarter of the year. Looking ahead, Palantir seems to be well placed to witness continuous acceleration in growth, because it is considered the leading supplier of software platforms for artificial intelligence (AI).
Various estimates from third parties have arranged it as the number 1 supplier of AI software platforms. This puts the company in position to get the most out of a market that is expected to generate $ 153 billion in income in 2028, with a compound annual growth of almost 41%. At this pace, the AI software platform market can be higher than $ 300 billion in income towards the end of the decade.
The Palantir income pipeline is now almost in line with the pace at which the AI software platform market is predicted. This is apparent from the 40% on an annual increase in his remaining deal value (RDV) in the previous quarter to $ 5.43 billion. That was almost double the income from the entire year and higher than the top growth that it reported for the entire year.
The robust growth in this metric is great news for Palantir investors. That is because RDV refers to the total value of the company’s contracts that still have to be fulfilled. What is even more important, there was a remarkable gear in RDV last quarter compared to the increase of 22% on an annual basis in the third quarter of 2024.
This jump in the number of contracts that Palantir signs can be attributed to the popularity of his artificial intelligence platform (AIP), with which customers can integrate generative AI solutions into their activities. AIP not only helps Palantir to attract new customers, but also encourages its existing customers to expand the acceptance of its generative AI platform, thanks to the productivity gain it delivers.
During the February income conference, for example, the management said: “Panasonic Energy Noord -Maartika sees the effects of his AIP expansion, because they have created a maintenance assistant to help 350 technicians make 5.5 million batteries a day, resulting in reduced downtime and fast on board on board of the new technici.”
There were other such examples of management about how the productivity improvements that AIP supplies made it possible to close larger deals with existing customers. These productivity gains can help expand the popularity of AIP, because the productivity improvement that AI is expected to send in the future is one of the biggest reasons for the approval of this technology.
Market research agency IDC estimates that every $ 1 that is spent on AI-oriented business solutions in 2030 could generate $ 4.60 in value. So don’t be surprised if Palantir will maintain excellent growth over the next five years.
We have seen that the market for AI software platforms is expected to rise by 41% until 2028. Based on the estimate of IDC that this market was worth $ 28 billion in 2023, a growth rate of 41% last year would have brought the market size for AI software platforms to almost $ 40 billion.
Assuming that all income that Palantir generated in 2024 came from the sale of AI-related solutions, the share in this market would be slightly more than 7%. If it succeeds in increasing its market share for AI software platforms by the end of the decade to 10%, the top line can rise considerably and it can amount to $ 30 billion (based on the earlier calculation that this market could achieve at least $ 30 billion in turnover in 2030).
That would be more than 10 times the turnover of the company in the previous year, and the stock market could in the long term reward such excellent growth with healthy profit. As such, collecting these AI shares on the Dips can turn out to be a smart move, because the recent weakness in the shares of Palantir may not last long.
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Harsh Chauhan has no position in one of the aforementioned shares. De Motley Fool has positions and recommends Palantir Technologies. The Motley Fool has a disclosure policy.
Where will the leader of artificial intelligence (AI) be in 5 years after the recent stock market market drama? was originally published by the Motley Fool
