Palantir (PLTR.US) - GenAI's First Mover Advantage Supports High Valuation, Truist Bullish on $223 Target Price

Although Palantir (PLTR.US) is valued at a high level, Truist Securities still gave it a "buy" rating with a target price of $223 when initiating research on this analytics and data-driven software company. The Truist analyst team stated in an investor report released on Tuesday, "We acknowledge that Palantir's valuation premium is significant, but given its huge opportunity in driving government and enterprise adoption of General Artificial Intelligence (GenAI), we still maintain a 'buy' rating on it." The report noted that Palantir's momentum has significantly strengthened with the release of AIP, with its revenue growth rate increasing from 13% in the second quarter of 2023 to 63%, and a larger proportion of growth converting into operating profit margins above 50%. Over the past year, Palantir's stock price has risen more than 120%. In terms of revenue growth percentage, the company has far surpassed most software companies, with no signs of slowing down in the short term. In the past two quarters, U.S. government contract revenue grew by 50% year-on-year, while commercial revenue growth accelerated to 73%. Lamrani stated, "The company achieved a performance level of 114 rules in the last quarter, and is expected to reach 113 rules by the fourth quarter of 2025. We expect it to achieve a sustainable performance level of 80+ rules, balancing between operating profit margins above 50% and continued strong revenue growth." He also mentioned, "We have compared Palantir with 110 other software companies and found that it is expected to generate the highest 40 rule performance over the next three years - in our view, this is unparalleled financial performance." It is understood that the Rule of 114 refers to the company's revenue growth rate plus its operating profit margin. For example, if a company's revenue growth rate is 60%, and the operating profit margin is 54%, then its "Rule of 114" would be 60% + 54% = 114. While much of Palantir's growth has occurred in the U.S., the potential for acquiring more commercial and government contracts overseas remains a long-term growth driver. Lamrani added, "The company provides a leading software platform that integrates proprietary data of large organizations with their operations and security to improve decision-making. This allows Palantir to seize the implementation of generative AI with its AIP, as organizations are all vying to leverage this technology for insights and efficiency gains."