3 reasons Palantir stock could double again in 2024

Last year was a memorable year Palantir Technologies (PLTR 0.09%). Shares of the software builder for the intelligence community have more than doubled in 2023, surging 167%.

After seeing annual declines for Palantir’s first two years as a public company, it finally turned a profit for shareholders. Can we continue to beat the market in 2024? Let’s take a look at some reasons why popular stocks could double again in the next year.

1. Sales growth will accelerate

Palantir’s sales have declined for three straight years, including last year, even as its stock price more than doubled. Slow growth is not a death sentence. This is especially true if the company is recording high sales profits that seem unsustainable. This doesn’t mean the market doesn’t welcome when trends turn positive.

Palantir went public in late 2020. Here are the profits so far:

• 2020: 47%
• 2021: 41%
• 2022: 24%
• 2023: 16% through first three quarters

Sales growth has been around 10% over the past four quarters. There are worse things than sustained double-digit growth, and things are only going to get a little better this year. Analysts expect sales to increase 20% in 2024.

Image source: Getty Images.

2. Commercial growth is starting to move the needle.

Palantir entered the market as a specialist in big data business intelligence software solutions primarily for the public sector. Government agencies and organizations choose Palantir to transform the data they collect into actionable information. Palantir still excels in this space, but it’s growing faster in the private sector.

Palantir achieved U.S. commercial sales of $403 million during the last four quarters, up 23% from a year ago. That’s only 19% of Palantir’s revenue mix, but it’s growing much faster than the overall business, up 16% in the last 12 months. Momentum is actually improving, with commercial revenues surging 33% in the latest report, a big reason total revenue accelerated sequentially in the third quarter.

The company’s wingspan continues to grow. Just this week, we partnered with the University of Colorado School of Medicine to strengthen the school’s research efforts and signed a multi-year commercial agreement. Options Care Health (OPCH -1.21%) It uses Palantir’s artificial intelligence platform to improve the company’s nurse scheduling, patient onboarding, supply chain execution, and other functions. Palantir has been making inroads into the healthcare space. The software is currently used in hospitals accounting for 16% of the country’s beds, up from just 1% a year ago.

3. Scalability and starting point are important

Palantir lost a lot of money when it went public. That is no longer the case. It has recorded four consecutive quarters of reported profitability, and analysts believe its reported net income will continue to grow faster than its peak levels for at least the next few years. Moreover, even Wall Street’s forecasts turned out to be conservative. Palantir has posted double-digit revenue in three of the last four quarters.

Despite the stock’s outstanding performance in 2023, I don’t really like the stock chart when I zoom out. Palantir stock traded as high as $45 three years ago. In that time, our revenue has more than doubled, and we are now clearly profitable. Stock prices could be double their current levels and still be well below their all-time highs. In short, it’s not too late to consider Palantir as an investment.