I'm Buying Palantir Stock (PLTR) After Earnings (Here's Why)
Summary
TLDRThe video script discusses Palantir's recent stock crash after their earnings call, where despite beating top-line expectations and raising full-year guidance, the stock fell over 15%. The speaker argues Wall Street might be missing the big picture, highlighting Palantir's strong Rule of 40 score, accelerating commercial revenue growth, and the impact of their AIP boot camps on customer adoption. They differentiate Palantir's platform from generative AI, emphasizing its role in creating ontologies for enterprise data analysis. The script concludes by positioning Palantir positively on the speaker's list of stocks to watch, suggesting an undervalued opportunity amidst mainstream skepticism.
Takeaways
- 📉 Palantir's stock price has significantly dropped by over 15% following their latest earnings call, raising questions about the company's future valuation.
- 🔍 The speaker aims to analyze Palantir's earnings and highlight insights that Wall Street analysts might have overlooked.
- 🎯 The video intends to cover Palantir's Q1 earnings, the discrepancy between media coverage and the actual earnings call, and the speaker's personal investment perspective.
- 🤖 Despite beating top-line estimates and raising full-year guidance, Palantir's stock fell due to high expectations and deceleration in US commercial growth.
- 📊 Palantir's 'Rule of 40' score of 57 indicates strong financial performance, combining a 21% revenue growth with 36% adjusted operating margins.
- 📈 Palantir's commercial revenue growth is accelerating, with a 40% increase in the US, indicating a shift towards a larger total addressable market.
- 🏆 The AIP boot camps are identified as a significant factor in Palantir's growth, allowing customers to quickly implement AI solutions with hands-on experience.
- 💡 The speaker emphasizes the importance of understanding the underlying technology and business model of a company like Palantir before investing.
- 🚀 Palantir's platforms, Gotham and Foundry, provide a comprehensive view of enterprise data, enabling the creation of digital twins for complex data analysis and operational optimization.
- 🛡️ AIP, Palantir's interface for interacting with ontologies, offers control and auditing capabilities, adding business value to generative AI models.
- 📚 The video concludes with the speaker adjusting Palantir's position on their investment list, moving it up based on the company's market strategy and growth potential.
Q & A
Why did Palante's stock crash after their earnings call?
-Palante's stock crashed over 15% due to a combination of high expectations and a perceived deceleration in their US commercial growth, which was down from 70% to 40%, and concerns about government agencies potentially reducing their dependency on Palante.
What is the 'Rule of 40' and how does Palante's score compare to other SaaS companies?
-The 'Rule of 40' is a metric used to evaluate SaaS companies, where the sum of their growth rate and profit margins should exceed 40. Palante's score is 57, which is higher than companies like Splunk, Adobe, and Salesforce, indicating strong financial performance.
What is the significance of Palante's AIP boot camps in their growth strategy?
-AIP boot camps are hands-on sessions that allow participants to work with Palante engineers to build real solutions using their own data. This approach significantly lowers the barrier to entry for using AI across various industries and has contributed to Palante's customer account growth.
How does the analyst Rousi Jura view Palante's business model and stock potential?
-Rousi Jura views Palante as an overhyped software company with a heavy reliance on professional services and custom software, suggesting that the boot camp strategy may not be as effective as claimed. He has a $5 price target on the stock.
What is the difference between how Alex Karp and Yahoo Finance are discussing Palante's earnings?
-Alex Karp, Palante's CEO, emphasizes the company's strong performance, particularly in the US commercial sector and through AIP boot camps. In contrast, Yahoo Finance focuses on the stock's decline and skepticism from some technologists and analysts about Palante's claims in the AI space.
What is the role of ontologies in Palante's platforms Gotham and Foundry?
-Ontologies, or digital twins, are maps of a company's resources and their relationships. Palante's platforms help companies build and use these ontologies to analyze data, track assets, and optimize operations, providing a real-time, comprehensive view of enterprise data.
How does Palante's AIP platform differ from being a generative AI model itself?
-AIP allows users to interact with their company's ontology through prompts, similar to interacting with a chatbot. It supports any third-party large language model and enables enterprises to set rules and guardrails, adding real business value without creating generative AI models.
What factors contribute to the acceleration of Palante's commercial revenue growth?
-Factors include the adoption of AIP boot camps, which facilitate rapid implementation of AI solutions, and a shift in market strategy that targets a wide range of industries, leading to an increase in commercial customer accounts.
Why does the video suggest that investors interested in AI should consider Microsoft instead of Palante?
-The video suggests that Microsoft is a better investment due to their leadership in generative AI software and their partnership with OpenAI, positioning them to benefit more from the AI trend compared to Palante.
What is the current position of Palante on the creator's list of stocks to get rich without getting lucky, and why?
-Palante has moved up to a higher position on the list due to its proven ability to lower the barrier to AI adoption across various industries and the effectiveness of its AIP boot camps, despite initial skepticism.
Outlines
📉 Palantir Stock Crash and Earnings Analysis
The video script discusses the significant drop in Palantir's stock value following their recent earnings call, raising questions about whether this marks the peak for the company's stock. The speaker outlines the topics to be covered, including an analysis of Palantir's latest earnings, Wall Street's potential oversights, resources for understanding Palantir's platforms, and the company's position on the speaker's stock list. The script highlights Palantir's earnings report, which showed a top-line beat and increased full-year guidance, yet resulted in a stock decline. Factors contributing to this drop are high expectations, deceleration in US commercial growth, and potential shifts in government agency dependency on Palantir. The speaker also criticizes mainstream finance media for not challenging analyst opinions, contrasting their coverage with actual earnings call statements.
🤖 The Impact of AIP Boot Camps on Palantir's Growth
This paragraph delves into the effectiveness of Palantir's AIP (Artificial Intelligence Platform) boot camps, which are intensive workshops allowing customers to work with Palantir engineers to build AI solutions using their own data. The speaker argues that these boot camps are a significant factor in Palantir's growth, as they enable rapid customer onboarding and AI tool implementation. Despite skepticism from some finance analysts, the data shows a substantial increase in Palantir's US commercial customer accounts and deal closures, suggesting that the boot camp strategy is successful. The speaker emphasizes the importance of understanding the underlying technology and business strategy when evaluating a company's stock potential.
💡 Clarifying Palantir's Position in the AI Market
The script addresses misconceptions about Palantir's role in the AI market, correcting the view that Palantir is a generative AI company. It explains that Palantir's platforms, Gotham and Foundry, facilitate data science across organizations by creating ontologies, or maps of enterprise resources and their relationships. AIP enhances this by allowing user interaction with the ontology through prompts, enabling the setting of rules and guardrails for AI model interactions. The speaker argues that AIP adds value by integrating with generative AI models without being one itself, and that understanding this distinction is crucial for accurate stock evaluation. The paragraph also includes a comparison of Palantir's 'Rule of 40' score with other SaaS companies, indicating Palantir's strong performance.
🚀 Adjusting Palantir's Ranking on the Stock List
In the final paragraph, the speaker reflects on Palantir's upward movement on their personal stock list, attributing this to the company's proven ability to lower the barrier to AI adoption across various industries and the success of their AIP boot camps. Despite mainstream media narratives, the speaker believes Palantir's market strategy is effective, as evidenced by their earnings data. The speaker emphasizes the importance of understanding the science behind stocks and encourages viewers to educate themselves on the subject. The video concludes with a reminder of the top companies on the speaker's list, with Microsoft and Nvidia leading in generative AI software and hardware, respectively, and Palantir moving up in rank due to its demonstrated market impact.
Mindmap
Keywords
💡AI Platforms
💡Earnings Call
💡Rule of 40
💡Generative AI
💡Commercial Revenue
💡AIP Boot Camps
💡Digital Twins
💡Ontologies
💡Market Perception
💡Investment Strategy
Highlights
Paler is a leading AI company with powerful platforms like Apollo, Gotham, and AIP, but it experienced a significant stock price drop after its recent earnings call.
The stock price decline raises the question of whether this is the peak for Paler's stock or if Wall Street is overlooking something significant.
Paler reported better-than-expected top-line results and raised its full-year guidance, yet the stock still fell, indicating a possible overreaction by the market.
Analyst Rousi Jura from RBC Capital considers Paler an overhyped company with a low price target, contrasting with the company's positive self-assessment.
Paler's Q1 performance was strong, with significant growth in the US commercial sector, despite high expectations and a tough comparison to the previous quarter.
The company's US commercial growth decelerated from 70% to 40%, suggesting potential challenges ahead, especially with government agencies looking to reduce dependency on Paler.
Paler's government business is considered more stable but lacks the high growth potential of the US commercial sector.
The 'Rule of 40' metric, which evaluates growth and profit margins, shows Paler with a score of 57, indicating strong financial performance compared to other SaaS companies.
Paler's revenue growth has been accelerating, with commercial business growth rates significantly outpacing the overall company growth.
AIP boot camps, which allow customers to work with Paler engineers to build AI solutions, are identified as a key driver for the company's growth.
Despite skepticism from some analysts, Paler's boot camp strategy has proven effective, with a significant increase in US commercial customer accounts.
Paler's AIP platform enables enterprises to interact with their data through natural language prompts, simplifying the use of AI across various industries.
Paler's platforms help companies build digital twins or ontologies to analyze data and optimize operations, without needing to create their own AI models.
The mainstream media's coverage of Paler's earnings appears to be at odds with the company's actual performance and strategy.
Paler's growth strategy, including AIP boot camps, is working as evidenced by their earnings data and customer growth.
The video concludes with Paler being moved up on the list of stocks to watch, reflecting its strong performance and potential despite market skepticism.
The importance of understanding the underlying technology and business model of a company like Paler is emphasized for making informed investment decisions.
Transcripts
paler is one of the most powerful AI
companies in the world because they
build some of the most powerful AI
Platforms in the world Apollo Gotham
Foundry and AIP but paler stock crashed
hard after their most recent earnings
call going down by over 15% in the last
week alone and with such a sharp decline
there's really only one question left to
ask was this the top for paler stock or
is Wall Street missing something big
your time is valuable so let's get get
right into it first things first I'm not
here to keep you hostage here's
everything I'm going to talk about
upfront I'll walk through paler latest
earnings results and show you what Wall
Street analysts are missing when they
cover them I'll highlight Some solid
resources to learn more about paler
platforms and I'll update where paler is
on my list of stocks to get rich without
getting lucky all right let's start with
paler earnings I actually wasn't
planning on covering paler earnings at
all since there's already so much great
content out there but then I saw this
quick clip from Yahoo finance shares of
Palante sliding after hours after
reporting first quarter earnings despite
the company beating on the top line and
raising its full year guidance they
raised their forecast for annual revenue
initial pop but now we're down here
about 9% in the after hours what is
going on here um I I would say it's a
combination of a couple things right
it's it's high expectations because this
has become a a hyped or in my opinion
overhyped uh generative AI you know
beneficiary company and then at the same
time you see uh us commercial
decelerating you know last quarter they
put up 70% us commercial growth now
they're growing us commercial 40% the
compare itself just gets a little
tougher I think that 70% commercial
number that they posted last quarter was
maybe boosted by just a very very easy
compare and some one-time uh impacts
government agencies are actually looking
to reduce their dependency on paler and
maybe multis sourcing use multiple
vendors and so I think there actually
could be a little bit of mixed results
in the government business over the next
couple years um you know I will also say
you know the the government business is
probably the stickier better quality
business for paler but it's not a high
growth business and I think that's why
they don't emphasize it nearly as much
as they do the US Commercial Business
rousi Jura is a software Equity Analyst
at RBC capital and according to him
paler is an overhyped software company
and he has a $5 price Target on the
stock if you've been watching this
channel for a while you know that one of
my biggest issues with the mainstream
Finance media is that they never fact
check what analysts are saying or really
push back on specific points let me show
you the big difference between how
they're covering paler earnings and what
was actually said on the earnings call I
think it is fair to say we crushed q1 in
the US uh we are on fire you see it in
the deal uh deal growth in the US uh
growing from 70 to 136 in a year um you
see it in the general General enthusiasm
uh around our products especially in
commercial but also in government which
has begun to re accelerate you see it in
general in our our customer growth in
uscom which grew
69% uh and again we are growing these
numbers while maintaining a rule of 40
score 57 which basically means we're
doing the impossible we built software
infrastructure that allows Enterprises
both commercial and government to move
Beyond chat move Beyond self-pleasuring
to actually produce things that are
valuable I'll get back to that
self-pleasuring thing a little later in
the
video uh I'll get back to how paler
helps Enterprises get real value out of
large language models a little later in
the video but since there's such a huge
difference in how Alex karp and Yahoo
finance are talking about paler latest
earnings let's dive into that first
starting with this whole rule of 40
thing uh and again we are growing these
numbers while maintaining a rule of 40
score or 50 7 which basically means
we're doing the impossible because price
to earnings ratios can be so misleading
for early stage SAS companies the rule
of 40 was created as another quick
metric to evaluate them even with a high
pric earnings ratio a SAS company could
still be fairly valued if their growth
rate plus their profit margins are
greater than 40 paler rule of 40 score
is 57 because their revenue grew by 21%
year-over-year and their adjusted
operating margins were 36% for the
quarter
which by the way is a whopping 50%
increase year-over-year as well that
shows a lot of financial discipline for
a company that achieved operating
profitability just 5 quarters ago so 21%
Revenue growth plus 36% operating
margins equals a rule of 40 score of 57
but is that good is it bad well instead
of guessing I found a list of SAS
companies and their scores so let's walk
through it together Splunk which just
got acquired by Cisco for $28 billion
has a rule of 40 score of 56 Adobe has a
score of 52 crowd strike and Salesforce
both have a score of 40 uipath has a
rule of 40 score of 36 Shopify and
Dropbox are both at a 31 and zoom has a
score of 15 it's also worth pointing out
that as a company's score goes up each
point is harder to achieve than the last
since a company would have to sustain
very high growth rates or very high
operating margins as their Market grows
and their competition increases over
time that's why most of the companies on
this list either have high Revenue
growth or high margins but not both so
according to this rule of 40 data paler
is absolutely crushing it with their
score of 57 paler Revenue growth has
been accelerating for the last four
quarters as well growing by 133% then 17
20 and now 21% year-over-year those
numbers are even better for their
commercial business where paler
commercial Revenue grew by 27% overall
and 40% in the US so in one or two
quarters they'll finally be making more
money from commercial companies than
government agencies which is a much
smaller total addressable Market another
thing to consider is that commercial
businesses typically make large software
and subscription purchases at the end of
the year to lower their tax burden and
the US government's fiscal year starts
in October so that's when different
agencies and military branches are get
their budgets that's why the fourth
quarter is usually paler highest quarter
for growth but if that's the case then
why did paler grow even faster in
quarter 1 the answer is their AIP boot
camps which are Hands-On working
sessions where participants can work
directly with paler Engineers to build
real solutions using real company data
in less than a week and underestimating
the power of these boot camps is the
exact same mistake that I made last year
which is why I decided to make this
video after seeing this clip from Yahoo
finance what about richy this company's
uh boot camps where they get customers
you know kind of up and running fast
with their AI software smart strategy in
your opinion I think it is but uh look I
would I would again put a little bit of
skepticism around that boot camp
strategy I think number one remember
paler is very heavy customized software
right I estimated more than 30% of their
business is actually Professional
Services and Outsource data science
rather than actual true software so I
don't know that is even the right fit
for something like a boot camp but it
doesn't go from there to a customer
becoming a multi-million dollar talenter
customer overnight which is how they
make it sound on earnings calls but but
in reality a lot of times those boot
camp customers might do multiple boot
camps or they might turn into a pilot
customer over time it's not nearly the
gamechanging to Game Changer to go to
market that that I think they claim it
to be AIP boot camps are a game changer
for paler and I can prove it the way
they work is that experts and decision
makers can go and plug in their own
company data even if it's sensitive and
use AIP to build their own AI tools and
workflows that means they leave these
boot camps with AI use cases that are
close to production ready and with
enough hands-on experience to actually
start implementing them on top of that
paler Partners can run their own boot
camps which effectively makes them an
extension of paler sales team and that
helps aip's adoption compound even
faster Alex karp often says that the
explosion in demand for peners platforms
comes from shifting to this more
Hands-On goom Market strategy with these
AIP boot camps well everyone's claiming
to do things and we're showing them
being done we could we could hire
marketing we've never been good at
marketing we could run around say there
are 50 things we do better there are
certain also technical things that we've
built that people don't understand their
value yet so it's better just to show
the value of an antology but let's not
take his word for it let's look at the
data palun us commercial customer
account is up by a whopping 69% year
over-year and 19% quarter over quarter
even though quarter 4 is usually their
strongest quarter that's why paler
closed 136 us commercial deals last
quarter which is more than one deal a
day and almost twice as many deals as
they closed this time last year and this
is really why paler growth picked up
across the board after they started
running these AIP boot camps in Earnest
if that's not the definition of a game
Game Changer I don't know what is all
right that's the what now let me show
you why there's such a big disconnect
between paler earnings call and how the
mainstream media has been covering it
Rishi so obviously you you're not a fan
you've got an underperform on the shares
here um we see it coming back to Earth
today but you know the market has not
been on your side thus far this year
there has been the stock has rallied
there um definitely are a lot of paler
buyers out there where do you think this
sort of disconnect lies between that
perception of paler as an AI winner and
what you're saying which is that in
truth it might not be yeah I I think it
comes down to that perception around
exactly what is paler exactly what is
AIP because when we talk to actual
technologists who are deep into AI deep
into ml who know more about this topic
than I could ever hope to over my life
they are expressing skepticism around
paler and and especially around AIP and
whether they are what they say they are
from you know an AI perspective what I
think it comes down to is volunteer
messages that they are this cutting get
generative AI company they message
around a lot around AIP and boot camps
and I think very deliberately Target
retail investors um and and look
everyone wants to play the AI game and
and don't get me wrong I'm a huge
believer in Ai and especially gen of AI
technology I think it is going to change
society as we know it I just don't think
paler is that cutting against generative
AI company that they claim it to be I'm
not saying it's not a useful company but
it is not what they claim it is and I
would say to any investor that really
wants to play this AI Trend go by
Microsoft um you know they are doing a
lot more when it comes to generative AI
plus they have that very deep
partnership with open AI which to me is
one of the most important companies in
the world today um I I think Microsoft
is a much better way to play the AI wave
uh than paler all right so rousi is
actually right about a couple things
here which we'll get back to in a second
the big thing he's wrong about is that
paler isn't really claiming to be a
generative AI company in the first place
and this is where Alex karp's comments
come back in we built software
infrastructure that allows Enterprises
both commercial and government to move
Beyond chat move Beyond self-pleasuring
to actually produce things that are
valuable I love this job paler does not
make large language models in fact they
don't make any generative AI models at
all and they don't have to paler Gotham
and Foundry platforms enable data
science across an entire organization by
giving everyone one consistent real-time
view of their Enterprise data they do
that by helping companies create digital
twins which are also called ontologies
at a high level an ontology is just a
map of a company's resources and how
they all relate to each other which
makes them a great way to see the big
picture for large and complex Enterprise
paler platforms help companies build and
use these ontologies to do things like
analyze mountains of proprietary data
track inventories assets and resources
and optimize Logistics chains
manufacturing processes and other forms
of operations for multinational
multi-billion dollar companies that's a
lot of stuff to keep track of especially
since things are constantly changing in
real time the problem is that Gotham and
Foundry are pretty complicated products
themselves and in my EXP experience
using Foundry the learning curve can be
pretty steep that's where AIP comes in
at a high level AIP lets users interact
directly with their company's ontology
through prompts so instead of coding or
manually creating different data sets
and dashboards users can interact with
AIP kind of like how they would with
chat GPT and not just chat GPT because
AIP can support any third-party large
language model that a company chooses it
lets Enterprises set rules and guard
rails on what the model can access which
tools it can use to calculate answers
and limit hallucinations it can control
the different kinds of actions a model
can take and keep a full audit log of
everything the model does what resources
and references it used and everyone who
prompted it in the first place that's
how AIP adds real business value to
generative AI models without being a
generative AI model itself and this is
why it's so important to understand the
science behind the stock for yourself I
know this video is a little long but I
wanted to be thorough since there's such
a big disconnect between the rhetoric
and reality around AIP paler and their
latest earnings including the rule of 40
and how paler score of 57 Stacks up
against other SAS companies they're
accelerating growth in commercial
revenues customer accounts and they're
expanding operating margins that gives
me all the context I need to really
decide where paler goes on my list of
stocks to get rich without getting lucky
so if you feel I've earned it consider
hitting the like button and subscribing
to the channel that really helps me out
and it lets me know to put out more
research like this thanks and with that
out of the way let me show you where
paler currently sits on my list of
stocks like I said earlier rousi was
actually right about a couple things in
that last Yahoo finance clip Microsoft
is the current king of generative AI
software especially with their deep
partnership with open AI that's why it's
been the top company on my list all year
Nvidia is a very close second because
they're the current king of AI hardware
and I don't think that's changing
anytime soon they're just too far ahead
and moving too fast for other chip
makers to catch up Nvidia reports their
earnings in a couple of weeks and if
they overd deliver like they have been
they could end up in the number one spot
on the flip side paler started in the
number nine spot on this list because of
all the concerns that I had last year
but paler has proven time and time again
that AIP seriously lowers the barrier of
Entry to use AI across almost every
Market vertical from National Security
and heavy Industries to finance and even
drug Discovery and their AIP boot camps
are a huge game changer for getting
those Industries to adopt their
platforms in the first place which we
saw when we dove into their earnings
data despite the current mainstream
media narrative paler goto Market
strategy is clearly working which is why
I'm moving paler up one more spot on
this list that's a pretty big move
considering how confident I am in each
company at the top of this list and how
far up paler has already moved over the
last 5 months that's why it's so
important to understand the science
behind the stocks and if you want to see
how I pick these stocks here's the video
where I walk through it step by step
either way thanks for watching and until
next time this is ticker simple U my
name is Alex reminding you that the best
investment you can make is in you
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