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Palantir (PLTR) Earnings Beat Expectations: A Strong Quarter Amidst Stock Decline

Source: Lord Of The Enterprise

Palantir (PLTR) Post Market down 6% but solid earnings and revenue beat and improved guidance.

Rev – $634Mn up 21% beats $615Mn consensus

Adjusted Operating income $226Mn beats forecast of $196-$200Mn

For the full year, Palantir lifted its revenue guidance to between $2.677 billion and $2.689 billion, above the previous range of $2.652 billion to $2.668 billion

Adjusted EPS – $0.08 per share in line with estimates

Palantir PLTR 8.06% followed up its “bombastic” December quarter with even better results for the March quarter as the data analytics software company continued to gain traction with its artificial intelligence tools in particular with U.S. commercial customers.

Nonetheless, the stock is losing ground following the announcement. Palantir shares, which rallied 8.1% in Monday’s regular session, was off more than 7% in late trading, leaving the stock up slightly from Friday’s close. The stock was up 47% this year as of Monday’s closing bell.

For the March quarter, Palantir posted revenue of $634 million, up 21% from a year ago, and ahead of both the company’s guidance range of $612 million to $616 million and Wall Street’s consensus of $615 million as tracked by FactSet.

Adjusted operating income was $226 million, well ahead of Palantir’s forecast of $196 million to $200 million. Adjusted profit was 8 cents a share, in line with Street estimates. Under generally accepted accounting principles, the company earned 4 cents a share.

Palantir gained impressive traction with U.S. commercial customers. That segment of the business grew 40% from a year ago and 14% sequentially to $150 million. Overall, commercial business was $299 million, up 27% and ahead of consensus at $292 million. Palantir said that the U.S. commercial business grew 69% year over year if you back out the contribution from customers where Palantir had made strategic investments a few years ago in a now-suspended program tied to SPAC-related IPOs.

Palantir said “remaining deal value” for U.S. commercial customers grew 74% from a year earlier and 14% sequentially. The total number of signed deals in the quarter increased 52% year over year for the quarter overall, including a 94% increase in U.S. commercial deals, Palantir reported.

Meanwhile, government segment revenue was $335 million, up 16% from a year ago, ahead of consensus at $322 million, and an acceleration from 11% growth in the December quarter.

“America is adopting technology and especially AI in a way no other part of the world is,” CEO Alex Karp said in an interview with Barron’s. “We are the only company providing the right infrastructure to make LLMs [large language models] actually valuable,” noting that the company is adopting a tagline of “beyond chat” for its AI business.

“We have a vibrancy of our tech and corporate scene that no one else has,” he said. “And as important as it is for Palantir, it’s going to change the GDP trajectory of America.” In the long run, he said the strongest players in AI will be in the U.S. and Middle East, with Europe “closing its eyes and hoping the nightmare will end.”

Palantir also provided strong guidance. For the June quarter, the company sees revenue of between $649 million and $653 million, ahead of consensus at $643 million, with adjusted operating income of between $209 million and $213 million, above the Street at $201 million.

For the full year, Palantir lifted its revenue guidance to between $2.677 billion and $2.689 billion, above the previous range of $2.652 billion to $2.668 billion. The company now sees U.S. commercial business for the year of above $661 million, up at least 45%; the previous guidance had called for 40% growth in that segment. Palantir also boosted its adjusted operating income guidance to between $868 million and $880 million from a previous forecast of $834 million to $850 million.

Investing in Dell: A Strategic Buy for Long-Term Growth

source:

Dell (DELL) $110-$115 Buy 3 Years Annual Return 11-13%+dividends, spread the buying out the stock jumped after hours, but there is still upside left long term.

This is from my October 23 article recommending SMCI – “Super Micro competes with behemoths like Cisco (CSCO), Dell Technologies (DELL), and Lenovo”. However, I didn’t buy Dell subsequently, their infrastructure solutions group  is about 40% of their revenue and servers half of that – I wanted to see more evidence that they would be getting meaningful revenue from the datacenter boom. 

This quarter they did as Dell’s Infrastructure Solutions Group produced $9.3B in revenue up 10% from the prior quarter. Servers and networking revenue hit $4.9B, driven primarily by AI-optimized servers. Projected growth in unstructured data from AI should benefit Dell’s storage business as enterprise and large corporate customers are in the early stages of AI adoption. AI-optimized server orders increased by nearly 40% sequentially, $800 million of AI-optimized servers, and backlog nearly doubled sequentially, exiting the fiscal year at $2.9 billion. 

From their earnings call “Demand continued to outpace GPU supply, though we are seeing H100 lead times improving. We are also seeing strong interest in orders for AI-optimized servers equipped with the next generation of AI GPUs, including the H200 and the MI300X.” 

Even after this quarter AI related revenue is less than 10% but growth will come from 3 areas, servers, storage and services.

Company wide revenue growth is expected to be only mid single digits this year, with better growth of 7-8% in the years 2025 and 2026.

I estimate earnings to grow much faster at around 12% for the next three years. As a cyclical, Dell gets low multiples and I wouldn’t assign more than 16x, so at 2026 earnings of $10, we should target a price of $160. About 12% a year.

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Stocks

Palantir and TSMC: Strong Long-Term Investment Opportunities in Data Analytics and Semiconductor Industry

source

*Palantir: (PLTR) Buy, $16.50  One year target $20.* 

*Invest 5 Years, 18-20% annual return.*

EPS Growth P/E PEG Sales Sales Growth P/S PS/G

0.30 29% 55 1.9 2.2 24% 16 67%

Palantir is a solid performer in the Data Analytics and AI space.

Their government business segment is a massive cash cow and a moat, because of long duration and sticky contracts and switching costs. 

The commercial segment is growing much faster at 50%, and will be its growth engine, with the help of its Artificial Intelligence Platform (AIP), which  tripled the number of users in the past quarter, with over 300 organizations using the new product in the last 5 months.

The stock is expensive especially after doubling last year but can be bought in installments and declines. I own some with an average cost of $15.

CPI Report: Inflation was slightly higher than expected.

Taiwan Semiconductor  Manufacturing(TSM) Buy, $100  One year target $120. 

Invest 5 Years, 15 % annual return. P/E 20, 3-5 year EPS growth 18-20%.

The Semiconductor foundry (manufacturing) leader by far with about 50% market share has large and deep moats in new processes, scale and costs. The semiconductor industry would collapse without it – it would take years for Global Foundries, Intel, Samsung, et al to even come close to catching up. Consider that TSM is spending up to $40Bn to set up a new foundry in Arizona,  and it’s having trouble finding enough qualified people for its plant. 

Revenue growth of 12-14% and earnings growth of 18-20% for the next three years augur well for the company. Normally TSM would be priced at over 40X earnings and closer to 10x sales, about twice the current price. Unfortunately, it being located in Taiwan and with China’s open design on it – multiples will always stay lower because of these geopolitical tensions. Still, the stock has rewarded investors well in the past with steady appreciation in the mid teens. It’s a must have for the portfolio specially for long term steady growth.

Palantir: (PLTR) Buy, $16.50  One year target $280. 

Invest 5 Years, 16-20% annual return. P/E 34, 3-5 year EPS growth 14-16%.

CPI Report: Inflation was slightly higher than expected.

December Consumer Price Index: +0.3% M/M vs. +0.2% expected and +0.1% prior.

+3.4% Year on Year  vs. 3.2% expected and +3.1% prior month

Core CPI, which excludes food and energy: +0.3% M/M vs. +0.2% expected and +0.3% prior. +3.9% Year on Year vs. 3.8% expected and +4.0% prior.

Stock Futures are flat as is the 10 year Treasury yield at 4.02%