Source: Jin10 Data
Despite the recent outstanding performance of growth stocks, investors should choose carefully. In the market driven by AI, Palantir stands out.
Recently, growth stocks have been the focus of the market. Now, many stocks seem to be easy to fall, and investors should be picky when buying or holding. Product structure, 10-30 billion yuan products operating income of 401/1288/60 million yuan respectively.
The Nasdaq Composite Index, which has high growth and heavy technology, has risen by about 45% from its low point in late October last year. The emergence of artificial intelligence has driven this trend, which has led to increased spending on advanced software features and their required chips.
Traders are currently selling to make a profit.$NVIDIA (NVDA.US)$The stock price is still below its historical high point of $140, falling 5.6% on Thursday. This indicates that generally growth-oriented companies are prone to pullbacks, especially if their earnings growth is not as fast as the market expects.
Trivariate Research recently conducted a screen aimed at helping investors find winners in the current situation. It screened 17 companies, whose profits have continued to grow historically, and analysts predict that they will be able to improve their gross margins.
Their idea is to find companies that can easily convert sales growth into higher profits. If sales growth is faster than the growth of revenue costs, the gross margin will increase, allowing the company to spend actively in other areas, which means that the operating margin can be kept stable or even increase. The result is net income growth.
$Palantir (PLTR.US)$is a company that provides software to large companies in the US government and around the world. Its system organizes entity data on a central platform to make information analysis easier.
The government uses data to identify security threats, and companies use data to make decisions about sales opportunities and costs. This is a huge value, so spending several million dollars to nearly 0.1 billion dollars in subscriptions every year can save a lot of money for many entities.
According to FactSet, Palantir's revenue is expected to grow by 18% annually from the end of this year to 2026, reaching 3.8 billion US dollars. Part of this will come from acquiring new customers, as companies increasingly need to organize and analyze their data, and are more eager to do so without hiring and paying a large number of new employees.
According to Fortune Business Insights, the annual growth rate of the big data analytics market will reach about 10% by 2032, reaching nearly 1 trillion US dollars. The software market will grow fastest among all segmented markets.
This means that Palantir can continue to grow, and the growth rate may exceed expectations. Palantir can seize market share because its software is a rare product that protects customer data privacy.
Deutsche Bank analyst Brad Zelnick wrote: "Palantir plans to increase investment naturally... to strengthen its competitive positioning, benefiting from its long-term investment and deep expertise in the complex data integration required for generative artificial intelligence, especially the built-in data security reputation in its ontology. "
The growth rate of government business will be slightly slower, because since Palantir began providing services to the United States since 2003, government business has grown for several years and has become part of the effort to prevent terrorist attacks. However, this part of the business will continue to grow as US agencies add AI-enhanced products to their existing systems.
The company recently signed a new agreement with the US Department of Defense, worth nearly 0.1 billion US dollars a year until 2029. This is almost 10% of the expected government revenue this year, highlighting the value of the company's products.
D.A. Davidson analyst Gil Luria stated that although the gross margin remains relatively stable overall, costs such as wages and expenses of cloud hosting service providers are also increasing as Palantir serves more customers, and larger contract sizes this year may increase gross profit margins. FactSet data shows that gross profit margin this year may increase from about 82% last year to about 83%.
As long as the gross margin rises or at least remains roughly stable, revenue growth will bring more and more cash to the company. Analysts expect Palantir (PLTR.N) earnings per share to increase by about 20% per annum in the long run. By 2026, earnings per share will increase from 33 cents this year to 47 cents.
Editor / Feynman