For immediate release
Chicago, IL – August 22, 2024 – Today, Zacks Investment Ideas offers highlights on Palantir PLTR and Arm Holdings ARM.
2 AI companies breaking corporate records: ARM, PLTR
Although trade in artificial intelligence has increasingly attracted skeptics, several companies are deeply involved, including Palantir and Arm holdhas helped prove the doubters wrong, posting robust quarterly releases that have broken records and reflected serious demand.
Let’s take a closer look at each one.
Arm reports record royalty revenue
ARM architects, develops and licenses high-performance, low-cost and energy-efficient CPU products and related technology that many of the world’s leading semiconductor companies and OEMs rely on to develop their products.
The company’s quarterly releases in its short history of being public have reflected steady demand pressure, regularly beating records set in previous releases. The earnings outlook for its current fiscal year remains bullish, with the Zacks Consensus EPS Estimate of $1.56 up 15% over the past year.
Its recent positive results were driven by record royalty revenues, with Armv9 (its most advanced technology) penetration growing rapidly. Impressively, revenue from chips based on Armv9 technology contributed around 25% of royalty revenue in the period, up from around 20% in the period before and 15% in the period before that.
The valuation picture is quite rich, reflecting investors’ high growth expectations. The company is expected to see 22% EPS growth on 23% higher sales in its current fiscal year (FY25), with FY26 expectations currently hinting at another 32% EPS growth on 23.4% higher sales.
Palantir raises the bar
Palantir builds software that enables organizations to effectively integrate their data, decisions and operations.
Its latest quarterly release brought positivity after earnings beat both earnings and revenue expectations while posting record GAAP EPS. Revenue increased 27% year-over-year, while adjusted EPS increased 200%.
Shares are up a staggering 90% YTD, with the current favorable earnings outlook supporting further gains. The stock has a Zacks Rank #2 (Buy).
The company’s platform remains highly attractive, reflected by 41% year-on-year customer growth. Impressively, PLTR closed over 27 deals worth $10 million throughout the period, further reflecting snowballing demand.
Although the strength was broad, the company’s US commercial sales were notably bright, growing 55% year-over-year, along with an 83% customer increase. Analysts have adjusted their sales expectations for the current year accordingly following the robust release and guidance upgrade, with the now expected $2.8 billion suggesting a 21% jump.
Packaging
While some have become a bit skeptical of the AI trade, several companies, including Palantir and Arm Holdings, have helped cool fears and are enjoying strong demand for their AI-related solutions.
Although the full benefits of the technology have yet to be fully realized, both stocks remain prime choices for those seeking exposure to artificial intelligence.
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