Palantir (NYSE: PLTR), the enigmatic artificial intelligence (AI) software firm, has intrigued investors since its addition to the public stock markets in September of last year. Counting the CIA and FBI among its many clients, the company specializes in deep data analysis. It takes swathes of data points and uses advanced AI algorithms to produce meaningful novel insights.
The utility of its software is exceptionally broad, with the company currently providing intelligence for military and policing operations, aiding companies with supply chain infrastructure, and assisting in the development of drugs through preclinical research.
However, the company appears to have found a new lucrative industry to expand into which could prove quite polarizing for investors – cryptocurrency.
How is Palantir exposing itself to crypto?
Palantir’s ‘Foundry’ software is hailed as providing an all-encompassing operating system for a whole host of modern enterprises. The company is particularly excited about the software’s potential use-case for crypto-based businesses, after discovering a strong fit for the software within the world of digital currency. On the back of this, the firm launched ‘Foundry for Crypto’ earlier this year.
As the crypto space continues to become more and more regulated, financial institutions across the board will need to develop appropriate compliance procedures. Palantir is uniquely positioned to help these companies given its experience in navigating government compliance issues and through its involvement in anti-money laundering practices.
Company COO Shyam Sankar exclaimed that the firm is “super excited” about its future prospects with cryptocurrency, adding that “we’re going to deliver compliance so they can focus on disruption.” At face value, this seems like an extremely positive move for the company as it looks to gain a foothold in a rapidly expanding new market.
Why is this move important for investors?
The important thing here is for investors is, surprisingly, not that Palantir is looking to explore the crypto space. What’s important is how doing so will reduce the company’s massive reliance on government contracts to generate revenue.
According to its latest earnings report, over half of the company’s revenue comes from government clients. By expanding operations to take in more commercial revenue, Palantir can effectively future-proof itself against sudden losses of government contracts.
Palantir’s commercial customer count grew by 135% year-to-date (YTD) as of its Q3 earnings call, with overall commercial revenue growing 37% year-over-year (YoY). The company predicts annual revenue growth of 30% or more each year through to 2025. This will massively depend on the continued growth of its commercial wing.
If Palantir can continue to match these lofty figures, investors will find it difficult to ignore the company for too much longer. Attention still needs to be paid to the company’s overall profitability and continued client growth, but it certainly looks like an investment that could pay off lucratively over the next number of years.
Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.