I'm Buying Palantir Stock (PLTR) After Earnings (Here's Why)

Summary

The 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

00:00

📉 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.

05:01

🤖 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.

10:02

💡 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.

15:03

🚀 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.

Keywords

💡AI Platforms

AI Platforms refer to the technological infrastructure that enables the development, deployment, and management of artificial intelligence applications. In the video, companies like Palanteer are highlighted for building powerful AI platforms such as Apollo, Gotham, and AIP. These platforms are central to the discussion as they represent the core products and services that drive the company's value and market position.

💡Earnings Call

An earnings call is a conference call with analysts and investors to discuss a company's financial performance over a reporting period. In the video, Palanteer's stock performance is analyzed in the context of their most recent earnings call, which revealed a significant drop in stock value despite the company beating expectations and raising full-year guidance.

💡Rule of 40

The Rule of 40 is a metric used to evaluate the performance of software-as-a-service (SaaS) companies by comparing their revenue growth rate and operating margins. The video explains that a score above 40 indicates a healthy SaaS company. Palanteer's Rule of 40 score is mentioned as 57, highlighting its strong financial performance compared to other SaaS companies.

💡Generative AI

Generative AI refers to artificial intelligence systems that can create new content, such as text, images, or music, based on learned patterns. The video discusses the misconception that Palanteer is a generative AI company, when in fact, they provide platforms that enable the use of generative AI models within an enterprise setting.

💡Commercial Revenue

Commercial revenue represents the income generated from the sale of goods or services to businesses. The video highlights Palanteer's growth in commercial revenue, particularly in the US market, as an indicator of the company's expansion and adoption of its AI platforms by commercial entities.

💡AIP Boot Camps

AIP Boot Camps are intensive, hands-on workshops where participants work with Palanteer engineers to build AI solutions using real company data. The video emphasizes the impact of these boot camps on accelerating the adoption of Palanteer's platforms and as a key strategy for customer acquisition and retention.

💡Digital Twins

Digital twins are virtual models or representations of real-world entities or systems. In the context of the video, Palanteer's platforms help companies create digital twins, also known as ontologies, to analyze and optimize various aspects of their operations, providing a comprehensive view of enterprise data.

💡Ontologies

Ontologies, in the context of Palanteer's platforms, are detailed maps of a company's resources and their interrelationships. The video explains how ontologies enable enterprises to gain insights and make decisions by providing a holistic view of their data, which is crucial for complex operations management.

💡Market Perception

Market perception refers to the collective view or sentiment of investors and analysts about a company's value and potential. The video discusses the disconnect between Palanteer's actual performance and the market's perception, influenced by mainstream media coverage and analyst opinions.

💡Investment Strategy

An investment strategy outlines the approach an investor takes to achieve their financial goals. The video concludes with the presenter's personal investment strategy, where Palanteer's position is reassessed based on a deeper understanding of the company's offerings, financials, and market potential.

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