Palantir partners with Microsoft to boost U.S. government revenue

From Nasdaq: 2024-08-17 13:17:00

Palantir Technologies (NYSE: PLTR) announced an expanded partnership with Microsoft (NASDAQ: MSFT) to sell analytic and artificial-intelligence services to defense and intelligence agencies in the federal government. This move comes after a strong second-quarter performance, aiming to boost growth in the U.S. government segment where revenue has recently lagged. The partnership will leverage Microsoft’s government cloud and AI services to accelerate deployments and drive new customer acquisitions.

Despite strong commercial revenue growth, Palantir has seen slower growth in its U.S. government segment in recent years. However, a rebound in government revenue in the second quarter of 2024 has shown promise. The partnership with Microsoft, utilizing Azure’s OpenAI Service and large language models, aims to reinvigorate this segment and create more sustainable revenue streams through AI services for defense and intelligence agencies. This collaboration could streamline approvals and enhance Palantir’s product offerings in the government sector.

While Palantir has seen success with technology, investors remain cautious due to its high valuation, trading at around 20 times forward price-to-sales ratio based on 2025 estimates. To justify this valuation, the company would need to accelerate revenue growth beyond 30%. The market may already be pricing in expectations of growth from the Microsoft partnership, making it a potential buy on a pullback for investors seeking a long-term opportunity. The Motley Fool’s Stock Advisor team has identified 10 best stocks for investors to consider, highlighting opportunities that could yield significant returns in the future.

Investing in Palantir Technologies presents a long-term opportunity, but its current valuation warrants caution for some investors. Considering the potential for accelerated growth with the Microsoft partnership, waiting for a pullback could offer a better entry point into the stock. The Stock Advisor service provides a roadmap for success, offering insights on building a portfolio and identifying growth opportunities in the market. Historically, the service has outperformed the S&P 500 significantly since 2002, highlighting its potential for investors seeking growth opportunities in the market.



Read more at Nasdaq: Will a New Microsoft Partnership Help Launch Palantir’s Stock to the Moon?