Palantir shares rocket 25% after revenue beat, strong demand for AI
The logo of U.S. software company Palantir Technologies is seen in Davos, Switzerland Januar 22, 2020.
Arnd Wiegmann | Reuters
Shares of Palantir popped more than 25% Tuesday, a day after the company released fourth-quarter earnings that surpassed analysts’ expectations for revenue and showed strong demand for its artificial intelligence offerings.
Palantir, known for its defense and intelligence work with the U.S. government, reported that revenue in the quarter increased 20% to $608.4 million, up from the $602.4 million expected by Wall Street. Palantir said it expects to report between $612 million and $616 million in revenue during its first quarter, shy of the $617 million analysts were anticipating.
In a letter to shareholders, CEO Alex Karp said demand for large language models in the U.S. “continues to be unrelenting.” Palantir has been scaling its Artificial Intelligence Platform, or AIP, and Karp said the company carried out nearly 600 pilots with the technology last year.
Analysts at Citi upgraded Palantir shares to neutral from sell and raised their target price from $10 to $20. They said Palantir delivered a “stronger-than-expected” fourth quarter driven by “breakthrough momentum” in the company’s commercial unit, but they still have some reservations about its conservative full-year guidance for its non-U.S. commercial sectors.
“We see these risks balanced by potential call options on new AI Monetization (AIP) and improving U.S. Government contracts into 2024,” the analysts wrote in a note Tuesday.
Jefferies analysts also upgraded the stock and said Palantir delivered an “impressive” quarter led in part by its commercial growth in the U.S.
Jefferies analysts said they had downgraded shares of Palantir at the beginning of the year because they believed it would take time for its AI platform to have a real impact, but now, they think the company is at an “inflection point.”
“We are impressed with AI Platform (AIP) ramping faster than our initial expectations and believe it’s appropriate to upgrade shares to reflect the momentum,” the analysts wrote in a Tuesday note. “We were wrong, but we’re not stubborn.”
However, the Jefferies analysts said they still have some concerns about Palantir’s valuation since shares are trading at a “23% premium to the large cap average,” so the analysts will “remain on the sidelines.”
Bank of America analysts reiterated their buy rating on the stock and said that while AIP is still in its early days, it is already impacting the company in a “meaningful way.” The analysts said they expect Palantir’s momentum with AI to continue, and they also see “significant opportunities” for the company’s software within the U.S. government.
“We think this remarkable growth is a sign of Palantir’s unique position as an enabler of AI-powered data-driven decision-making in a tangible, accessible, and operational way,” the analysts wrote Tuesday.
CNBC’s Michael Bloom contributed to this report.
Beta Technologies shares surged more than 9% after air taxi maker Eve Air Mobility announced an up to $1 billion deal to buy motors from the Vermont-based company.
Eve, which was started by Brazilian airplane maker Embraer and is now under Eve Holding, said the manufacturing deal could equal as much as $1 billion over 10 years. The Florida-based company said it has a backlog of 2,800 vehicles.
Shares of Eve Holding gained 14%.
Eve CEO Johann Bordais called the deal a “pivotal milestone” in the advancement of the company’s electric vertical takeoff and landing, or eVTOL, technology.
“Their electric motor technology will play a critical role in powering our aircraft during cruise, supporting the maturity of our propulsion architecture as we progress toward entry into service,” he said in a release.
Mateusz Slodkowski | SOPA Images | Lightrocket | Getty Images
Amazon’s cloud unit on Tuesday announced AI-enabled software designed to help clients better understand and recover from outages.
DevOps Agent, as the artificial intelligence tool from Amazon Web Services is called, predicts the cause of technical hiccups using input from third-party tools such as Datadog and Dynatrace. AWS said customers can sign up to use the tool Tuesday in a preview, before Amazon starts charging for the service.
The AI outage tool from AWS is intended to help companies more quickly figure out what caused an outage and implement fixes, Swami Sivasubramanian, vice president of agentic AI at AWS, told CNBC. It’s what site reliability engineers, or SREs, do at many companies that provide online services.
SREs try to prevent downtime and jump into action during live incidents. Startups such as Resolve and Traversal have started marketing AI assistants for these experts. Microsoft’s Azure cloud group introduced an SRE Agent in May.
Rather than waiting for on-call staff members to figure out what happened, the AWS DevOps Agent automatically assigns work to agents that look into different hypotheses, Sivasubramanian said.
“By the time the on-call ops team member dials in, they have an incident report with preliminary investigation of what could be the likely outcome, and then suggest what could be the remediation as well,” Sivasubramanian told CNBC ahead of AWS’ Reinvent conference in Las Vegas this week.
Commonwealth Bank of Australia has tested the AWS DevOps Agent. In under 15 minutes, the software found the root cause of an issue that would have taken a veteran engineer hours, AWS said in a statement.
The tool relies on Amazon’s in-house AI models and those from other providers, a spokesperson said.
AWS has been selling software in addition to raw infrastructure for many years. Amazon was early to start renting out server space and storage to developers since the mid-2000s, and technology companies such as Google, Microsoft and Oracle have followed.
Since the launch of ChatGPT in 2022, these cloud infrastructure providers have been trying to demonstrate how generative AI models, which are often training in large cloud computing data centers, can speed up work for software developers.
Over the summer, Amazon announced Kiro, a so-called vibe coding tool that produces and modifies source code based on user text prompts. In November, Google debuted similar software for individual software developers called Antigravity, and Microsoft sells subscriptions to GitHub Copilot.
WATCH: Amazon rolls out AI-powered tools to help big AWS customers update old software
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