Palantir (NYSE: PLTR) and UiPath (NYSE: PATH) represent two different ways to invest in the growing artificial intelligence (AI) market. Palantir mines data from disparate sources to help its government and commercial clients make data-driven decisions, and UiPath’s software robots help companies automate repetitive tasks.
Palantir went public via a direct listing in September 2020. Its stock started trading at $10, and it’s more than quadrupled to a record high of more than $43. It was also added to the S&P 500 this September. UiPath went public via a traditional IPO at $56 in April 2021, but it now trades at $13. Let’s see if Palantir will remain the better AI stock for the foreseeable future.
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How Palantir proved the bears wrong
Palantir was founded more than two decades ago in response to the Sept. 11 attacks. It was partly funded by the CIA’s Q-Tel venture arm, and it was reportedly used to track down Osama bin Laden in 2011. Most U.S. government agencies now use Palantir’s Gotham platform to manage their data, and it says its ultimate goal is to become the “default operating system for data across the U.S. government.” It’s also been expanding its Foundry platform for large commercial customers.
Palantir initially claimed it could grow its revenue by at least 30% annually through 2025. Its revenue increased 47% in 2020 and 41% in 2021, but only grew 24% in 2022 and 17% in 2023. It blamed that slowdown on the uneven timing of its government contracts and tougher macro headwinds, which curbed Foundry’s commercial growth.
But as Palantir’s top-line growth cooled off, it reined in its spending and turned firmly profitable on a generally accepted accounting principles (GAAP) basis in 2023. Those stable profits set it up for its recent inclusion in the S&P 500.
Palantir expects its revenue to increase 23%-24% this year as it secures new government contracts for Gotham, expands Foundry’s higher-growth U.S. commercial business, and launches new generative AI tools for processing large amounts of data. Analysts expect its GAAP EPS to more than…
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