Baird starts on Palantir at neutral, factors AI strengths, valuation

Investing.com -- Baird initiated coverage on Palantir Technologies Inc (NASDAQ:PLTR ) with a "neutral" rating, given its strong position in artificial intelligence applications while noting its more than 300% gain year to date.

“We are positive on the company's position, but are wary of chasing given strong YTD performance and valuation,” analyst added.

Palantir’s artificial intelligence platform, launched in 2023, has boosted adoption among commercial enterprises and U.S. government agencies, helping organizations leverage generative AI to improve operations, with significant customer growth in the U.S. commercial sector.

Baird noted Palantir’s success in deploying generative AI into production, calling it a critical area for future value creation. Brokerage also noted Palantir’s strong operating momentum and ongoing contract wins, with significant potential for further market penetration.

Risks include Palantir’s high valuation premium and concentrated revenue base, with the top three customers accounting for 18% of 2023 revenue. Founder voting control, which could exceed 49.9%, and potential shifts in government contracts under a new administration were also noted as concerns.

Despite these risks, Baird highlighted Palantir’s deep management experience “Senior management has a deep passion for improving the competitive edge for western institutions,”

Palantir shares were up 2% at $74 on Thursday trading.

Source: Investing.com