Analysis of MICI stocks
- Stock not yet exploitable amid 53% gain so far in 2023
- Shares consolidating since February with a buy point of 10.41
- If it breaks above the buy point, investors should wait for the moving averages to catch up
Industry group ranking
* No real-time data. All data shown was captured as of 1:02 p.m. EDT on 05/12/2023.
Palantir Technologies (PLTR) is today’s IBD stock as the enterprise software maker is trading near a buy point. PLTR stock is not yet actionable amid its 53% gain in 2023.
Trading today, Palantir fell 3.8% to 9.50. The shares are trading well below the software maker’s all-time intraday high of 45 set in late January 2021. Additionally, any investor who bought PLTR stock at 7.25 during its direct quote on September 30, 2020 can only indicate a small gain.
PLTR stock rallied after its May 8 first-quarter earnings report. Meanwhile, Palantir stock has been consolidating with an entry point of 10.41 since February. But investors should watch Friday’s action, including volume.
A bullish development would be for Palantir stock to form a handle and the moving averages catch up to where the stock is trading.
If stocks somehow reverse and break above the buy point on Friday, investors should delay taking a position. The title would be too far from its moving averages. If he forges a handful, the 21 or 50 day moving lines will likely catch up somewhat.
PLTR stock: improved profitability
Improved profitability boosted PLTR stock. In the fourth quarter of 2022, Palantir reported net income of $31 million under generally accepted accounting principles, or GAAP. This is Palantir’s first GAAP positive net profit quarter. In the March quarter, it made a net profit of $17 million.
However, decelerating revenue growth is a problem. In 2022, revenue growth slowed to 24% from 40% in 2021 and 47% in 2020.
Additionally, Palantir derives almost 60% of its revenue from government agencies. They use Palantir software for intelligence gathering, counterterrorism, and military purposes. Additionally, the software maker has expanded into healthcare, energy and manufacturing.
The Denver-based company offers three platforms. One is Palantir Gotham, used primarily by government agencies. Additionally, there is Palantir Metropolis for banks, financial services companies, and hedge funds. Additionally, Palantir Foundry is used by corporate clients. Palantir often customizes software for clients.
New artificial intelligence platform
Meanwhile, integrating artificial intelligence into its software platform has been a strategy for many years. Amid the sudden buzz around “generative” AI, the question is whether Palantir will capitalize on the opportunity.
Generative AI could disrupt a multitude of industries by creating text, images, videos and computer programming code on their own. Additionally, generative AI technology is already finding applications in marketing, advertising, drug development, legal contracts, video games, customer support, and digital art.
During the release of its first quarter results, Palantir announced its new offer. “Artificial Intelligence Platform” It will start rolling out to select customers this month.
“AIP’s goal is to combine the machine learning technologies of existing PLTR technologies with large language models, co-existing in today’s PLTR platforms, helping businesses and governments make more decisions based on data and further optimize processes,” said a Bank of America report.
High composite rating
The PLTR stock holds an IBD composite rating of 98 out of the best possible 99, according to IBD Stock Checkup.
IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. Additionally, the best growth stocks have a composite rating of 90 or higher.
Additionally, PLTR stock has an accumulation/distribution rating of A-minus. This note analyzes a stock’s price and volume changes over the past 13 weeks of trading. Its current rating indicates that more funds are buying than selling.
The rating, on a scale of A+ to E, measures the institutional buying and selling of a stock. A+ means large institutional buys; E stands for heavy sale. Think of the C note as neutral.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
YOU MIGHT ALSO LIKE:
IBD Digital: Unlock IBD’s premium stock listings, tools and analysis today
Learn to Time the Market with IBD’s ETF Market Strategy
How to use the 10 week moving average to buy and sell
Get Free IBD Newsletters: Market Readiness | Technical Report | How to invest