- Palantir stock could soar 80% in the next 12 months on its AI developments, Wedbush said.
- Wedbush's Dan Ives raised Palantir's target to $30 following the company's earnings report.
Palantir is solidifying itself as a top pick to gain exposure to the artificial intelligence revolution that's underway, according to Wedbush Securities.
Following the company's strong earnings beat for the last three months of 2023, Wedbush's Dan Ives raised the firm's 12-month price target for shares of the tech company to $30, representing nearly 80% upside from Monday's closing level of $16.72.
Shares of Palantir were up 25%, trading at $20.93 around midday on Tuesday.
"Last night for Palantir was when this company went from an off Broadway play to a primetime Broadway theater right off of Times Square under the bright lights," Ives said in the note, assigning Palantir an "Outperform" rating.
The company, known for its defense and intelligence work with the US and international governments, Ives notes that Palantir is set to ride the wave of AI hype. Ives heaped praise on Palantir's artificial intelligence platform (API), which has gained further momentum among both new and existing customers.
Palantir's CEO Alex Karp said in a letter to shareholders that commercial demand for large language models continues to be "unrelenting."
"It's clear that as AI use cases explode, enterprise CIOs are looking towards Karp & Co. as the AI golden child for a platform to build out AI frameworks for the future," Ives said.
The tech firm anticipates US commercial revenue to surpass $640 million in 2024, reflecting growth of at least 40%. Palantir reported on Monday that fourth-quarter revenue increased by 20% to $608.4 million, exceeding Wall Street's estimates of $602.4 million in revenue.
Wall Street's hype for AI is still high even after the nascent technology fueled huge gains across the tech sector in 2023. Chip maker Nvidia has notched new highs in the last week after earnings from giants including Microsoft and Meta Platforms pointed to big plans for AI and demand for the GPUs that power the tech.
While a handful of mega-cap names continue to produce the biggest returns for investors, markets are looking for the next opportunity in AI as valuations among the Magnificent Seven look extreme and as many experts warn of a potential bubble reminiscent of the dot-com era.
Palantir, Ives says, is one such opportunity in AI.
"In a nutshell, PLTR remains an undiscovered gem and a core part of our thesis in the AI Revolution just now taking shape across the tech world," Ives added.