Oleblue
2 weeks ago
Is the Deal Between Palantir Technologies and Oracle a Game Changer?
Danny Vena, The Motley Fool
Mon, Apr 8, 2024, 2:00 PM EDT
One of the most high-profile trends over the past year or so has been the growing adoption of artificial intelligence (AI). The latest advances in this quickly evolving field have created something of an AI gold rush as businesses scramble to determine how best to leverage this nascent technology.
There are a vast and growing number of applications for generative AI, which can create original content, including text, images, and video. It can also summarize data, produce presentations, and streamline time-consuming and mundane tasks, thereby increasing worker productivity. Time is money, so companies are eager to claim their share of the expected windfall.
Now, AI software and data analytics pioneer Palantir Technologies (NYSE: PLTR) and database and cloud computing specialist Oracle (NYSE: ORCL) are joining forces to help bring AI to the masses.
The letters AI emblazoned on a cloud symbol positioned above a circuit board.
Image source: Getty Images.
A pairing of titans
In a press release on Thursday, Palantir and Oracle announced a far-reaching collaboration to combine their AI and cloud expertise to further accelerate the adoption of AI. The duo will "provide secure cloud and AI solutions aiming to power businesses and governments around the world."
The goal of the partnership is to help organizations get the most value out of their data, thanks to the combination of Palantir's "leading AI and decision acceleration platforms," which will leverage Oracle's "distributed cloud and AI infrastructure."
Palantir offers three broad-based data analytics software services. Gotham is the company's original government-centric and defense-oriented data analytics platform. Foundry offers similar services for corporate and enterprise clients, and Metropolis handles banks, hedge funds, and other financial services firms.
As part of the agreement, Palantir will move Foundry workloads to Oracle Cloud. Furthermore, Palantir will make Gotham and Artificial Intelligence Platform (AIP) -- its generative AI offering -- deployable across Oracle's distributed cloud for the first time.
One of the obvious target markets is government customers and enterprise users seeking greater control over their data. The release highlighted Oracle's "air-gapped regions for defense and intelligence customers," and Palantir's work with law enforcement and government intelligence agencies is well documented. Combining Palantir's AI-powered data analytics with Oracle's secure cloud seems like a no-brainer.
A win-win situation.
Both Palantir and Oracle have been attracting attention for their AI efforts in recent months.
Palantir's expansion beyond its original government mandate has served the company well. In the fourth quarter, revenue of $608 million grew 20% year over year, and Palantir generated its fifth consecutive quarterly profit, but that tells just part of the story. While government revenue -- which tends to be lumpy -- grew 11% year over year, commercial revenue increased 32%. This was led by its U.S. commercial segment -- its fastest-growing business -- as revenue soared 70% year over year and is expected to jump at least 40% in 2024.
The catalyst for that growth was AIP. Palantir began offering boot camps to kick-start customer adoption of AI and demand has been off the charts. By working side-by-side with Palantir's engineers, companies can solve real-world and business-specific problems with the help of its generative AI-powered application.
In October, management announced Palantir's intention to complete 500 such boot camps over the coming year. The company has since "blown that goal out of the water," hosting more than 560 boot camps across 465 organizations in just four months.
Oracle has also been attracting attention for its recent successes. In its fiscal 2024 third quarter (ended Feb. 29), revenue of $13.3 billion grew 7% year over year, generating adjusted earnings per share (EPS) of $1.41, up 16%.
It was Oracle's backlog, however, that raised eyebrows. The company's remaining performance obligation (RPO) -- or contractually obligated sales that haven't yet been booked as revenue -- jumped to $80 billion, up 29% year over year to an all-time record.
Furthermore, Oracle's cloud infrastructure revenue increased 52% year over year. This far outpaced the performances of Amazon Web Services, Alphabet's Google Cloud, and Microsoft Azure, which generated growth of 13%, 26%, and 30%, respectively. This suggests Oracle was stealing market share at the expense of the competition. CEO Safra Catz said demand for its AI cloud capabilities "substantially exceeds supply," and expects Oracle's cloud infrastructure operation to remain in a "hypergrowth phase ... for the foreseeable future."
Is the deal a game changer?
One of the biggest benefits of this deal is that Palantir and Oracle will -- jointly and individually -- offer a wide range of complementary cloud and AI services. Oracle Cloud provides "performance, scalability, and flexibility." When combined with Palantir's "leading data and AI platforms," it offers users the best of both worlds and could attract potential customers who might otherwise pass.
Given their growth prospects and the tantalizing AI wild card, both stocks offer compelling opportunities. Oracle is currently selling for 22 times forward earnings, making it a steal. At 70 times forward earnings and 16 times forward sales, Palantir might seem prohibitively expensive, but those metrics fail to factor in its accelerating growth. However, the forward price/earnings-to-growth (PEG) ratio -- which takes that growth into account -- results in a multiple of less than 1, the standard for an undervalued stock.
While the deal might not rise to the level of being a game changer, it does enhance the prospects of two of AI's fastest-rising stars. It will also likely help both companies continue to expand their market share in the fast-growing AI space.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Danny Vena has positions in Alphabet, Amazon, Microsoft, and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, Oracle, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Is the Deal Between Palantir Technologies and Oracle a Game Changer? was originally published by The Motley Fool
https://finance.yahoo.com/news/deal-between-palantir-technologies-oracle-180000463.html
fwb
3 weeks ago
Good Article.....Thanks
AIP reminds me of when AMZN started....
AMZN started with SELLING BOOKS to create their COMMERCIAL BASE..........
and Name recognition..........
PLTR is using AIP to create their COMMERCIAL BASE
What PLTR has that AMZN or MSFT didn't have before they became big
was The GOV CONTRACTS,,,,,,,,,,,,,,,,,,,,,,,,,
Oleblue
3 weeks ago
Cathie Wood Thinks Palantir Could Disrupt Microsoft in Artificial Intelligence (AI). Here's Why I Think She's Right.
Adam Spatacco, The Motley Fool
Sun, Mar 31, 2024, 3:45 AM EDT
Earlier this month, Ark Investment Management CEO Cathie Wood sat down for a podcast conversation hosted by former NBA stars Andre Iguodala and Evan Turner. While Iguodala may be best known for his NBA accolades, the athlete has a prolific career off the court as a start-up investor.
During the podcast, Wood spoke at length about major themes fueling the artificial intelligence (AI) narrative. One of the emerging players in AI is big data analytics company Palantir Technologies (NYSE: PLTR).
Wood has a large position in Palantir through her exchange-traded funds (ETFs). During her conversation, she put forth the idea that Palantir could end up being one of the largest AI companies in the world and even pose a threat to Microsoft (NASDAQ: MSFT).
Here's why I agree with Wood, and how Palantir could become one of the most lucrative investment opportunities in the AI realm.
Palantir's creativity is paying off
Big tech took the spotlight in 2023. Microsoft kicked off the AI revolution with a multibillion-dollar investment in ChatGPT developer OpenAI. Alphabet and Amazon both swiftly followed, with each investing in a competing platform called Anthropic. Moreover, chipmaker Nvidia invested in the world's most valuable privately held software start-up, Databricks.
With so much money flowing into high-profile AI businesses, it was easy for investors to overlook Palantir's moves. Last April, the company launched its fourth software application: the Palantir Artificial Intelligence Platform (AIP).
In an effort to commercialize the product in a low-cost, efficient way, Palantir began hosting immersive seminars called bootcamps. During these events, prospective customers have an opportunity to demo Palantir's various products and identify a use case centered around AI.
I find this lead generation strategy to be quite creative and effective. By showing customer leads exactly how Palantir can help bolster their AI ambitions, the company has experienced an acceleration in client growth.
In 2023, Palantir grew its overall customer base by 35% annually. But more importantly, the company increased its commercial customer count by 44%. This is important as skeptics have expressed doubt that Palantir will ever truly grow beyond its legacy government business and could fail to penetrate commercial enterprises.
https://finance.yahoo.com/news/cathie-wood-thinks-palantir-could-074500631.html
DiscoverGold
4 weeks ago
Analyst who correctly forecast Palantir's stock rally updates outlook
By: The Street | March 29, 2024
The artificial intelligence boom has helped many tech stocks, including Palantir Technologies, produce market-beating returns.
While the S&P 500's 10% first-quarter return is nothing to sneeze at, Palantir shares surged 34%. Its shares also substantially outperformed the benchmark index over the past year, returning 172% since March 2023. Meanwhile, the S&P 500 is up about 29%.
Those extraordinary gains likely surprised many investors who were concerned that the Peter Thiel-founded company would struggle because the possible recession and congressional wrangling over the debt ceiling would dent demand.
However, where others saw risk, TheStreet Pro's Stephen Guilfoyle saw an opportunity. He bought shares when they were trading below $10 in April 2023, allowing him to profit handsomely from surging optimism over AI spending.
Given Palantir's shares rocket-ship ride higher and a current price near $23, Guilfoyle has updated his analysis and stock price target.
Palantir's demand driven by AI wave
Guilfoyle's purchase of Palantir stock last year was based on its strong, debt-free balance sheet, improving free cash flow, and a clearer pathway to profit growth.
The highly successful launch of OpenAI's ChatGPT in December 2022 has proven to be a boon for the company, making Guilfoyle's prediction prescient.
Interest in using AI to digest, interpret, and create new insights from siloed data has swelled across most industries, resulting in the most rapid research and development since the Internet Age in the 1990s.
Banks are using AI programs to hedge risks, evaluate loans, and price products. Drugmakers are exploring its use in predicting drug targets and clinical trial outcomes. Manufacturers are evaluating if it can boost production and quality. AI may also help retailers forecast demand, manage inventories, and curb theft.
AI's widespread applications seem boundless, which has led many companies and governments to turn to Palantir's deep expertise in managing and protecting data for help in training and running new AI apps.
Palantir's (PLTR) roots stretch back to helping the U.S. government design systems for counter-terrorism. Its Gotham platform continues to assist governments in those efforts today. It also offers solutions that manage, interpret, and report data across enterprise and cloud networks to large companies too.
Its deep data experience positioned it perfectly to help customers design large language models and other AI solutions using its AI platform (AIP).
"The demand for [Artificial Intelligence Platform] AIP is unlike anything we have seen in the past twenty years," said CEO Alan Karp last summer. "We are currently in discussions with more than three hundred additional enterprises to deploy AIP within their organizations, all of which are searching for an effective and secure means of adapting the latest large language models for use on their internal systems and proprietary data."
Karp's optimism appears to have been well-placed. Palantir's year-over-year sales growth has exceeded 20% in each of the past three quarters, and its earnings per share growth in each of those quarters has been in the double-digit percentages.
Revenue totaled $736 million and earnings per share were 9 cents in the fourth quarter, up 21% and 16% from the previous year.
Wall Street analysts think Palantir's profit growth will continue. The consensus analyst estimate for earnings in 2024 and 2024 is 33 cents and 39 cents, respectively, an increase of 34% and 17%.
Palantir pause may set up another opportunity
Initially, Guilfoyle's Palantir stock price target was $12. However, he bumped that target to $18 last June, $20 last July, and $22 last August.
Shares eclipsed $22 in February, reaching a high of $27.5 in early March. Since then, they've retreated about 16% to $23.
Guilfoyle thinks Palantir's pullback may be creating another upside opportunity for investors.
"Palantir is on sale and I'm buying for future generations," wrote Guilfoyle recently. "Palantir remains a top-15 long-side allocation for me."
The biggest knock against Palantir is its valuation.
The company's shares aren't cheap by most metrics and boast a sky-high price-to-earnings (P/E) ratio, a fact that Guilfoyle concedes.
"The stock trades at 74 times forward-looking earnings (probably a little less now), 25 times sales, and 15 times book," said Guilfoyle.
Tech stocks are known for trading at higher valuations because of their faster growth rates. Still, Palantir's P/E is significantly higher than that of many companies in the sector. For example, Nvidia and Advanced Micro Devices, two other AI stock beneficiaries, have forward P/E ratios of 38 and 56.
Nevertheless, Guilfoyle thinks Palantir's got enough going right for it to deserve a premium valuation. In his words, it has a "fortress-like balance sheet" and substantial operating cash flow.
Operating cash flow exceeded $700 million in the past 12 months, and its current ratio, a measure of its ability to pay short-term liabilities with short-term assets, is 5.5, giving it plenty of financial firepower to take advantage of the AI opportunity.
Guilfoyle believes shares will trade higher since the AI spending trend appears to have multi-year legs. His price target is $27.
Read Full Story »»»
DiscoverGold
DiscoverGold
4 weeks ago
Analyst Pumps the Brakes on Gen-AI Stock Palantir Technologies (PLTR)
By: Schaeffer's Investment Research | March 28, 2024
• Monness Crespi Hardt did not mince words in its downgrade of the AI stock
• PLTR remains up 40% in 2024 and 198% year-over-year
Palantir Technologies Inc (NYSE:PLTR) is down 3.7% to trade at $23.65 today, after Monness Crespi Hardt downgraded the software stock to "sell" from "neutral." The analyst in coverage did not mince words about the Peter Thiel-backed tech company, calling out its 'egregiously rich valuation' and despite a “meteoric rise on the Gen AI rocket, now it’s time to return to reality." The brokerage did wax bullish on Palantir's long-term artificial intelligence (AI) uptrend, though.
The shares are now testing their 40-day moving average, a trendline that flipped to support after a massive 30.8% post-earnings bull gap on Feb. 6. Despite the breather today, PLTR is 40% higher in 2024 and scored a more than two-year high of $27.50 on March 7.
It's no surprise then, that calls rule the roost. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 2.78 ranks higher than 74% of readings from the past year.
Now may be an ideal time to weigh in on the stock's next move with options. This is per PLTR's Schaeffer's Volatility Index (SVI) of 45%, which stands in the 1st percentile of readings from the last 12 months. In other words, the market is pricing in low volatility expectations for the equity right now.
Read Full Story »»»
DiscoverGold
JJ8
1 month ago
It would be interesting to know why "Peter Thiel, Director, on March 12, 2024, sold 7,044,756 shares in Palantir Technologies (PLTR) for $174,615,999. Following the Form 4 filing with the SEC, Thiel has control over a total of 112,417,537 shares of the company, with 112,417,537 shares controlled indirectly." Why to sell if this stock according to one analyst is share price is going to $30. Isn't he aware of it?
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