Jim Cramer was right about this stock. Should you buy it?

Renowned CNBC pundit Jim Cramer was bullish on Palantir Technologies Inc (NYSE: PLTR) for some time.

Talking to a callerthe Mad Money host recommended investing in the data analytics company because it has “incredible technology” and projected a more than 25% increase in its (then) share price to $28.

The former hedge fund manager turned pundit has accurately predicted a significant rally in Palantir stock, currently trading at $37.

But a 60% rise over the past five months begs the question of whether it’s already too late to build a position in Palantir Technologies. Well, not really, according to Bank of America Securities analyst Mariana Perez Mora.

24/7 Wall Street Information:

• Mad Money host Jim Cramer recommended buying Palantir stock on April 12th
• He was right when he predicted a significant rally in Palantir Technologies stock
• Here’s why Palantir’s stock price could continue to rise in the coming months
• Dividend stocks have a history of providing stable returns during economic downturns. Grab a free copy of our “7 Things I Look for in a Dividend Stock” report, which reveals and the first two mandatory dividend shares for 2025

She raised her price target for PLTR shares in a recent note to $50, suggesting a potential upside of another 40% from here.

Palantir Stock is a notable beneficiary of AI

Palantir Technologies was founded in the wake of 9/11. US intelligence agencies began using its proprietary software in the early 2000s to analyze data and identify patterns that could help intercept terrorist activities.

The technology company has since evolved into a leader in artificial intelligence with the launch of its Artificial Intelligence Platform (AIP), which helps organizations securely integrate AI capabilities into existing operations and workflows.

In August, PLTR cited AI tailwinds as it raised full-year revenue guidance to $2.74 billion to $2.75 billion. Consensus estimates at the time were $2.70 billion, according to LSEG.

Mariana Perez Mora is bullish on Palantir stock because it’s as well positioned for long-term growth as Apple is in the early days.

“Early estimates failed to anticipate the world of apps, streaming, smart devices and ultimately how this new product will bring the first trillion dollar company,” she told clients in a note to September 10 research.th.

Palantir has an advantage over its rivals because it offers customized solutions that provide added value to customers. Such an unconventional approach equips this NYSE-listed firm with exceptional pricing power.

A 12% year-over-year increase in adjusted operating margin to 37% in its last reported quarter further demonstrates how effective this strategy has been for Palantir Technologies, according to BofA’s Mora.

Why else should you buy PLTR stock?

PLTR has historically generated most of its revenue from federal government contracts, making it well-positioned for a looming economic slowdown as governments and large businesses tend to be more resilient amid a challenging economic backdrop.

Jim Cramer had also attributed his optimism Palantir Technologies price prediction partly to the strength of the company’s April 12 government revenuesth.

But Palantir stock is also worth owning because its management is committed to diversifying its customer base to unlock its next phase of growth. PLTR accelerated its trading revenue, which climbed 33% to $307 million in fiscal Q2.

The trade accounted for 45% of the company’s total quarterly revenue as the number of customers in that segment grew to a total of 295, up 83% year-on-year due to “an unrelenting wave of customer demand for AI systems that work. beyond merely performative and academic,” according to Executive Director Alex Karp.

Palantir Technologies is all the more attractive because of that rapidly expanding customer base, as profitability tends to depend on the number of customers in the software industry.

Verdict

As is evident, Palantir stock could warrant an investment despite the massive rally since the start of the year, as the company’s financial performance has been immaculate in 2024.

The data analytics/AI company has recently outperformed its peers in the software space, and a diversified customer base that is delivering profitable growth suggests this trend will continue moving forward.

While PLTR might not make you a millionaire, at least in the short term, it certainly looks pretty well positioned to deliver solid returns over the next 12 months.

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