Should Investors Consider Palantir Stock In Their Portfolio?
Palantir Technologies (NYSE: PLTR) is a tech company that has mostly been in the spotlight since it went public last September. For the uninitiated, the software giant provides big data analytical services for massive clients. In 2003, the company began with funding from PayPal co-founder Peter Thiel. The company managed to secure deals from various U.S. government agencies. They include the Central Intelligence Agency, the Defense Department, and Internal Revenue Service. Across the Atlantic, the U.K. National Health Service is also a client.
You can see the breadth of Palantir’s analytics services. Whether it’s locating bombs, looking for tax frauds, or managing a pandemic, Palantir has ways to contribute. Given its clientele, it is no surprise that investors are watching PLTR stock closely.
This week, Palantir and International Business Machines (NYSE: IBM) announced a major partnership on open artificial intelligence (AI) applications for business. The product could simplify how businesses build and deploy AI applications with IBM Watson and help users make sense of vast amounts of data. This would also allow easier access for non-technical customers. With availability as early as March 2021, we could be looking at a catalyst to drive revenue in the coming quarters.
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What’s The Big Deal Between Palantir & IBM?
The new product will integrate Palantir Foundry with IBM data and AI services. The easy-to-use solution enables the use of AI in decision-making and process automation. At a time when digital transformation is crucial for enterprises, you can see how this offering resonates with investors.
According to a recent survey sponsored by IBM, approximately three-quarters of businesses are either already implementing AI into their operations or are planning how to do so. The new partnership aims to meet the growing need for application-development tools that can be used by customers with a non-technical background.
“Palantir was founded to build software for the world’s most critical institutions,” said Alex Karp, Chief Executive Officer of Palantir. “Our partnership with IBM combines our forces to put our joint solution into the hands of the institutions and people who need it most and will propel the world’s most critical institutions into an unprecedented new digital age. We share IBM’s commitment to the adoption of responsible and ethical AI.“
Palantir & BP Partners Up To Accelerate Energy Transition
Last Friday, Palantir expanded its partnership with BP (NYSE: BP). The company has been working with the British oil giant since 2014. Palantir’s data analytics software has been critical in BP’s digital transformation. Although the terms of the contract have not been disclosed, it is likely to be a multi-million dollar amount. BP is now committing to using Palantir’s Foundry software for five more years as it works towards its ambition of becoming a net-zero company. There are opportunities for BP to utilize Palantir’s solutions across wind farms, electric charging networks, and solar generation applications.
“We started this company to work on the hardest problems,” Palantir Chief Operating Officer Shyam Sankar said in a press release announcing the deal. “Helping deliver energy more safely and efficiently, in a disrupted market, while supporting the transformation of a business the size and scale of BP, is exactly what we built this platform to do.”
Last month, Palantir said it had signed a multi-year agreement to provide its Foundry platform to the U.K.-based mining titan Rio Tinto (NYSE: RIO). As Palantir continues to win more deals, investors are getting a clearer look at exactly what’s behind the business.
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Can Palantir Fend Off Potential Competitors?
The company’s main competitors include Splunk (NASDAQ: SPLK) and Verint Systems (NASDAQ: VRNT). These are all technology companies that focus on business intelligence or data management. Palantir’s strong relationship with government agencies in major markets makes it one of the most compelling investments in the market. Apart from the US, the company has been working alongside other companies in the UK to develop a COVID-19 database for the National Health Service (NHS). The success of these projects would no doubt strengthen the company’s outlook, which is already strong for 2020.
Palantir’s two primary data mining platforms, namely Gotham for U.S. government agencies and Foundry for enterprise clients, run on public cloud services including Amazon (NASDAQ: AMZN) Web Services (AWS) and Microsoft’s (NASDAQ: MSFT) Azure. Amazon and Microsoft have existing cloud contracts with a number of U.S. government agencies. Could the tech giants eventually come up with similar tools to disrupt Palantir? With their large balance sheets, you could say that anything is possible. But Palantir has already got a head start, and it won’t be giving that lead away anytime soon.
All in all, Palantir remains an attractive investment because the company continues to build a book of contracts. The string of partnerships may not convince investors enough, but its major deal with IBM this week certainly solidifies its range of offerings. As the company expands, shareholders could be looking at respectable long-term rewards. There is a decent chance of the company raising guidance when it reports quarterly results next week.
Palantir has been speeding up its efforts to gain more clients in the private sector. Therefore, investors can expect further collaborations to materialize in the months to come. Palantir’s data analytics services could be of important use to clients in a variety of different sectors. With organizations of all sorts dealing with more data, the ability to obtain insights from these data would be crucial, whether it is to gain efficiency or to enable a better understanding of customers.
While holding a lot of potentials, investors also have to note that the company releases its full-year result on February 16. From there, it will also indicate when the lockup period will be lifted. This could mean a sudden ramp-up in the number of shares unloaded by the company’s principals and employees. Thus, if PLTR stock is on the top of your list, you might want to tread carefully. The uncertainty in the short term could move the price in big ways. But if you believe in the long-term potential of PLTR stock, you could be looking at a stock to buy and hold for the years to come.