What You Need To Know Ahead of Palantir's Earnings Report Monday

Palantir Technologies (PLTR) is set to report first-quarter earnings after the bell Monday, with investors likely to be watching for commercial revenue gains and whether the big data analytics software maker can demonstrate its artificial intelligence (AI) growth is sustainable.

Analysts project Palantir's revenue to be $615.32 million for the first quarter of 2024, higher than the same period in 2023, according to estimates compiled by Visible Alpha.

Palantir is expected to report net income of $83.94 million, or 3 cents per share, up from the $19.15 million and 1 cent per share reported in the same period the year before.

Key Metric: Commercial Revenue Growth

Investors will be watching for sustained growth in Palantir's commercial segment. The company reported better-than-expected earnings for the final quarter of 2023, driven by surging commercial demand for its AI platform.

Commercial revenue made up around 45% of Palantir's total revenue in the full year of 2023, with government revenue accounting for the rest. In March, Palantir announced a $178.4 million U.S. Army contract.

"Our U.S. commercial business continues to be a significant driver of our growth, a trend that we expect to continue," Palantir CEO Alex Karp wrote in a letter to shareholders in February. In the final quarter of 2023, Palantir's U.S. commercial revenue surged to $131 million, a 70% year-over-year jump.

Analysts project Palantir's total commercial segment revenue for the first quarter will be $290.4 million, according to estimates compiled by Visible Alpha, up from the $284 million reported in the fourth quarter of 2023 and the $236.1 million reported in the year-ago period.

Strong growth in Palantir's commercial segment could strengthen investor sentiment about the company's ability to expand beyond government clients.

Goldman Sachs analysts said they "believe the key debate on the stock will be the durability of growth in US Commercial as Palantir’s strengths with data stitching intersect with customers’ AI projects."

Business Spotlight: Sustaining AI Momentum

Palantir's stock has gained amid enthusiasm for its potential amid a boom in AI demand, with some analysts saying it's a key benefactor while others have suggested it's overvalued on AI hype.

Wedbush analysts have called Palantir the "Messi of AI," after star soccer player Lionel Messi, saying there are "a handful of times every decade there are tech companies that are so ahead of the competition and in a sweet spot of the future growth."

In contrast, Jefferies analysts said the stock was "overhyped" on AI potential, writing that the firm had previously "underestimated the severity of the slowdown in PLTR's commercial and government businesses, which has resulted in a longer-than-expected demand recovery that could continue to constrain growth through 2024."

Investors will likely be watching closely Monday to gauge whether AI momentum can sustain Palantir's growth.

Palantir shares finished 1.9% higher Thursday at $22.55. They've gained over 31% since the start of 2024.