Palantir Stock: Buy at the High?

Palantir Technologies (NYSE: PLTR) has become one of the latest companies to stand out in the high-growth area of artificial intelligence (AI). Even though this technology player has been around for about 20 years, earnings have truly taken off in recent times. This is thanks to Palantir's Artificial Intelligence Platform (AIP), launched just last year, along with a surge in interest from commercial customers -- in the past Palantir was most associated with government contracts.

And all of this has helped Palantir stock to soar 150% so far this year. In fact, the stock has reached its highest level ever, trading at valuations many would call expensive and well surpassing Wall Street's average price estimate of about $28. At this point, is it a good idea to hold off on buying this high-momentum stock, or should you buy Palantir at the high? Let's find out.

Helping make data a game-changer for customers

First, a little background on Palantir's path so far. The software company helps governments, companies, and organizations aggregate their data in order to make the best use of it. While this many not sound exciting, it actually is -- and often delivers results that are game-changing and/or help a customer register enormous savings in costs and gains in efficiency.

For example, Palantir's systems for Cleveland Clinic help optimize patient placement, forecast bed availability, and boost overall efficiency at the hospital. United Airlines is using Palantir to help it manage equipment issues -- to ensure maximum uptime. Since the launch of this predictive maintenance system, Palantir has helped United save millions of dollars through the avoidance of flight delays and cancellations.

In Palantir's earlier days, government contracts drove growth, and the company steadily but slowly increased revenue. But in more recent times, and with the launch of AIP, Palantir has posted double-digit revenue growth and has seen a massive gain in its commercial business -- so that U.S. commercial growth now surpasses that of government revenue growth.

In the most recent quarter, U.S. commercial revenue advanced 55% to $159 million and U.S. commercial customer count jumped 83% to nearly 300. It's important to remember that Palantir had only 14 U.S. commercial customers four years ago -- so growth here truly has surged. Government revenue also continues to make impressive gains, climbing 23% in the quarter, so the company can count on both its traditional revenue driver as well as the new source of gains found in the commercial business.