Inflation and rising interest rates - this mix hit technology stocks particularly hard last year. Gradually, the inflationary pressure is easing and the central banks - above all the US Fed - may now be pursuing a somewhat less rigorous course. This mix of factors is just one reason why the technology sector is currently making a spectacular comeback on the stock market. The emerging boom in generative artificial intelligence (AI) is seen as another driver. In recent weeks, several companies have really electrified investors with figures and forecasts on this megatrend. In addition to the semiconductor specialists Nvidia and Marvell Technology, the software developer Palantir Technologies is among this group. The Denver-based group equips companies and security agencies with operating systems for the integration, analysis and use of complex data sets.
In early May, Palantir released its interim report for the first quarter of 2023. The very first bullet point on a 29-page presentation shows key progress for the company. The group was able to end its second consecutive quarter with GAAP net income. "We achieved GAAP operating profitability for the first time in our company's history," the bullet point reads. Palantir was launched in 2004 by its current CEO, Alex Karp. Its four partners included well-known German-American technology investor Peter Thiel. Palantir made the leap over the breakeven line thanks to strong demand. For the first quarter of 2023, the group posted revenue growth of 18% to $525 million, with nearly 44% of revenue coming from the U.S. government. The business, which includes Palantir's work for the CIA, expanded 22% in the first three months of the year. In the commercial sector, revenues in the home market actually grew by more than a quarter.
Palantir surprised positively not only with revenue and profit, but also with its outlook. Management slightly raised its forecast for the full year. CEO Karp now expects sales of USD 2,185 billion to USD 2.235 billion. Previously, the target range was USD 2.180 billion to USD 2.230 billion. In operational terms, the top manager is targeting adjusted earnings of between USD 506 million and USD 556 million. Here, USD 481 million to USD 531 million was previously on the plan. After starting the year in the black, the CEO is also aiming for a GAAP surplus in all further quarters. He has high hopes for AI. The Group recently developed the "Artificial Intelligence Platform", or AIP for short. It is based on the same technology as the well-known ChatGPT application and can be used for military purposes as well as by business customers. In presenting the figures, Alex Karp described the interest and demand for AIP as "unprecedented". The company can continue to rely on the Pentagon: earlier this week, Palantir was awarded a multi-year contract with the US Special Operations Command (USSOCOM). Under this contract, worth up to USD 463 million, the service provider will support the U.S. armed forces - with the help of AI, among other things - in the integration and use of real-time information.
Following this news, Palantir shares, listed on the New York Stock Exchange, gained close to 5%. Not only in terms of performance, but also in terms of volatility, the software stock stands out from the crowd right now. The historical price fluctuation range for the period of one month is more than 90%. The Nasdaq-100 Index shows a value of a good 16% here. With new Softcallable Barrier Reverse Convertibles, yields can be created from the relatively strong price swings of Palantir. The reason: volatility is a key parameter for the terms of this popular product structure. Specifically, a BRC based on Palantir and denominated in CHF yields a guaranteed coupon of 15% p.a., the barrier is 49% of the initial level. A BRC denominated in USD has an identical protection threshold. Here, the payout amounts to 18% p.a. Of course, the high volatility has a downside: it entails a relatively pronounced risk of threshold violation, which is compensated via the product conditions. Please also note the soft callable feature: The issuer can call and redeem both BRCs early.
We look forward to answering all of your questions about our products and how they are traded. Please don't hesitate to get in touch! Phone: 058 800 11 11, email info@leonteq.com or contact us here.