Where will Palantir stock be in 3 years?

With its shares up 84% year-to-date, Palantir Technologies (NYSE: PLTR) Palantir has had a good run, especially after better-than-expected second-quarter results that showed accelerated growth following the deployment of new generative artificial intelligence (AI) tools. Let’s take a look at how this opportunity might play out over the next three years and whether Palantir can grow to its uncomfortably high valuation.

Second-quarter results revive optimism about AI

The last few weeks have not been kind to AI companies, especially when it comes to hardware. Industry leaders like Nvidia, Advanced Micro DevicesAnd Super microcomputer Palantir’s stock price has fallen significantly from its all-time highs on concerns that this new technology may be more hype than reality. However, Palantir’s impressive second-quarter results make the case for continued investment.

Total revenue rose 27% from a year earlier to $678 million. But while Palantir is best known for its government and defense contracts, its smaller U.S. business segment may finally be taking off, growing 55% to $159 million, or just over 20% of the total.

Palantir’s business provides big data analytics and management software solutions for the private sector. The rise of this segment could have several key benefits in the years ahead. Unlike government contracts (which can be fickle depending on who’s in power or global conflicts that break out), exposure to the private sector could add stability and predictability to Palantir’s operations. It also demonstrates the value of its recent pivot to generative AI.

The next three years could depend on AI

So far, the AI ​​industry has mostly has benefited hardware giants like Nvidia, which produces the computer chips needed to run and train users large language models (LLM). However, the software sector may not be living up to expectations, with some Goldman Sachs analysts suggesting that massive spending on hardware may never pay off. Palantir could help change that in the coming years.

Palantir integrated generative AI tools with its legacy machine learning and data analytics software to create its Artificial Intelligence Platform (AIP). In battlefield scenarios, AIP can provide operators with real-time information on threats and potential targets. However, in the private sector, it can help companies analyze internal data to gain valuable insights and improve security and operational efficiency.

Management said it has seen “unprecedented” demand for the services. Palantir has struck several AIP-related deals with major companies, including the nonprofit seniors’ rights group AARP, which will use it to personalize user experiences, and the Japanese electronics conglomerate Panasonicwho will use the platform to optimize its finances, quality control and manufacturing.

The story continues

But while Palantir, partly funded by the CIA, enjoys deep economic gap to the government…