Meet the Newest Addition to the S&P 500. The Stock Has Soared 575% Since Early Last Year, and It's Still a Buy Right Now, According to 1 Wall Street Analyst

The S&P 500 is regarded as the best overall benchmark of the U.S. stock market and consists of the 500 largest publicly traded companies in the country. Given the range of its member companies, it is considered to be the most dependable gauge of overall stock market performance. To become part of the S&P 500, a company must meet the following prerequisites:

• Be a U.S.-based company.

• Have a market cap of at least $8.2 billion.

• Be highly liquid.

• Have a minimum of 50% of its outstanding shares available for trading.

• Be profitable according to GAAP in the most recent quarter.

• Be profitable over the preceding four quarters in aggregate.

Palantir Technologies (NYSE: PLTR) is one of the most recent additions to the S&P 500, being added to the fold on Sept. 23. It's also one of only 11 companies to make the grade so far this year. Since the advent of generative AI in early 2023, Palantir stock has surged 575%, its gains fueled by robust sales and profit growth.

Even after gains of that magnitude, some on Wall Street believe there's more to come. Let's review what has driven the stock higher and whether its lofty price has simply made it too risky.

Palantir made a name for itself serving the U.S. intelligence and law enforcement communities. The company's first-of-their-kind algorithms could sift through mounds of data and connect seemingly disparate bits of information to track down would-be terrorists.

In more recent years, Palantir has applied its sophisticated algorithms to give enterprises a competitive edge by providing actionable business intelligence. Thanks in part to its decades of experience, the company quickly recognized the opportunity represented by generative AI and developed timely solutions to meet the need. Palantir's Artificial Intelligence Platform (AIP) was born of those efforts. By leveraging existing company data, AIP can provide businesses with solutions tailored to specific needs.

Palantir's go-to-market strategy for AIP is what helped set the company apart. The company offers boot camps that pair customers with Palantir engineers to help them fashion solutions to their unique challenges. This strategy has proven to be wildly successful.

Just last month, Palantir announced a new multi-year, multi-million-dollar contract with Nebraska Medicine, which used AIP to improve healthcare by harnessing technology. After what it describes as "a series of targeted bootcamps," the health system was able to implement a new workflow that resulted in a more than 2,000% increase in its Discharge Lounge utilization, which freed up beds earlier and decreased the time needed to discharge a patient by one hour (on average).