Palantir’s AI Commercialization Strategy Sparks Analyst Debate

Palantir continues to elicit mixed reactions on Wall Street despite reiterating its plans to commercialize artificial Intelligence and generate significant value from it.  According to the Chief Executive Officer Alex Karp, the focus shifts towards making money from artificial Intelligence instead of just producing AI tools.

Palantir Bullish Thesis

The company is banking on expectations that companies will soon allow their employees to leverage various AI tools to carry out multiple operations. They also expect such tools to play a key role in decision-making. Currently, some companies have imposed restrictions on the AI tools that employees use, but as more information and innovations come to light, Palantir expects the lifting of such bans.

Palantir is already exploring ayes to monetize its artificial intelligence platform AIP as it looks to generate optimum value from it. For instance, it plans to allow businesses, defense, and military organizations to leverage the language models on the platform to make key decisions.

Going by the strides, the company has made around the revolutionary technology, Wedbush Securities analyst Dan Ives believes the company is a star in the making. Likewise, the analyst has reiterated an outperform rating on the stock with a $25 price target that implies more than 30% upside potential from current levels.  According to the analyst, Palantir is a pure AI play that aims to monetize AI beyond government departments.

Palantir has already engaged more than 300 enterprises, all looking to leverage its AI platform as they look to adapt to the latest LLMs for use in internal systems and for analyzing proprietary data. The company has already secured a $463 million five-year contract from the U.S Special Operations Command in which it is expected to leverage its AI tools.

Palantir Bearish Thesis

However, not all analysts agree about Palantir’s solid long-term prospects. RBC Capital Markets Rishi Jaluria believes the company is overpriced and is worth much less than current levels. The analyst has an underperform rating on the stock with a $4 price target, which implies a 72% downside potential from current levels.

According to the analysts, Palantir is not a pure AI generative company as there is nothing that appears to be ordinary compared to other players in the sector.  The analyst feels AI will become part of the service that the tech company has been offering with minimal value. The fact that the company is not adding anything unique means it won’t be a leader in generative AI.

The sentiments are familiar, as there have been growing concerns as to whether companies will live up to expectations and generate significant value from the technology. For the most part, companies are yet to provide detailed information on how AI is poised to be a game changer in their long-term valuations.

Many analysts and strategists feel that the AI hype has been overstretched without something concrete to report on.  Nvidia is one of the few companies that have emerged as an ideal AI play going by the strong demand for its graphic processing Units used in powering and enabling various AI functions and capabilities. Likewise, the company has remained the darling of the AI space, with its stock rallying by more than 200% year to date.

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