TLDR:
- Ken Griffin’s Citadel increased Palantir (PLTR) stake by over 1,100% to 5.68M shares in Q2
- Palantir stock has risen 150% in 2024, though analysts predict a 32% drop
- Company’s commercial customer base grew 83% to nearly 300 U.S. clients
- Q2 was most profitable quarter in Palantir’s history with $134M net income
- Stock trades at 120x forward earnings, higher than Microsoft, Nvidia, and Amazon
Ken Griffin’s hedge fund Citadel has made a bold move in the artificial intelligence sector, increasing its stake in Palantir Technologies by more than 1,100% during the second quarter of 2024. The investment now totals 5,680,767 shares, despite widespread analyst predictions of a downturn in the stock’s value.
Palantir, known for its data analytics and artificial intelligence solutions, has seen its stock price surge 150% this year. However, the average Wall Street analyst currently maintains a “hold” rating on the stock and projects a 32% decline over the next twelve months.
The company’s valuation metrics show it trading at 120 times forward earnings estimates, placing it at a premium compared to other major tech companies. This valuation exceeds those of established tech giants like Microsoft, Nvidia, and Amazon.
Palantir’s recent financial performance has shown strong momentum in its commercial sector. The company reported its most profitable quarter in its 20-year history, generating $134 million in net income during the second quarter.
The growth in U.S. commercial customers has been particularly noteworthy, with the client base expanding 83% to reach nearly 300 customers. This represents substantial growth from just 14 U.S. commercial customers four years ago.
Revenue from commercial customers increased by 55% to $159 million in the most recent quarter. Much of this growth has been attributed to strong demand for the company’s Artificial Intelligence Platform (AIP), which launched in 2023.
The expansion of Palantir’s commercial business comes as the company maintains its traditional government contracts, which continue to show double-digit growth.
Griffin, who founded Citadel in 1990, has built the firm into the most profitable hedge fund manager ever, with $64 billion under management. The fund maintains investments across various technology companies, including positions in Microsoft, Nvidia, and Amazon.
The artificial intelligence market, currently valued at $200 billion, is projected to reach $1 trillion by the end of the decade, according to industry estimates.
Palantir’s core business focuses on helping organizations analyze their data to improve decision-making and operational efficiency. Their solutions often result in cost savings for clients.
The company’s recent quarterly results showed strong performance across multiple metrics. The record net income of $134 million marked a turning point in profitability for the two-decade-old company.
Revenue growth from U.S. commercial customers reached 55% in the quarter, indicating strong market adoption of their solutions.
The company’s Artificial Intelligence Platform has attracted particular attention, with Palantir describing customer demand as “unrelenting.”
Griffin’s increased investment comes at a time when Palantir’s stock trades at premium valuations compared to tech sector peers.
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