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Palantir Technologies (NYSE: PLTR) stock was in raging form on the market Nov. 2 following the release of its third-quarter results — and as it became clear that the company’s growth is set to accelerate thanks to a new catalyst that has significantly expanded its revenue opportunity.

Shares of the company, which is known for providing software solutions and data analytics services to government agencies and commercial customers, shot up 19% in a single session. Let’s see why that was the case and check if Palantir stock — which has already gained a whopping 194% in 2023 — can sustain this terrific momentum over the next year.

Palantir’s solid growth is here to stay

Palantir’s Q3 revenue increased 17% year over year to $558 million. The company’s adjusted earnings grew at a faster pace, up from $0.01 per share in the year-ago period to $0.07 per share last quarter. The numbers were slightly ahead of Wall Street’s expectation of $0.06 per share in earnings on $556 million in revenue.

The guidance was also ahead of expectations. Palantir expects its fourth-quarter revenue to land at $601 million at the midpoint, which would be a jump of 18% from the prior-year period. This points toward a slight acceleration in Palantir’s growth in the current quarter, which also explains why the company has raised its full-year guidance. It now expects full-year revenue to land at $2.22 billion, which would be a slight improvement over the earlier forecast of $2.21 billion.

Palantir’s updated guidance indicates that its revenue is on track to increase 16% in 2023. However, there is a good chance it could deliver faster growth thanks to fast-growing adoption of its Artificial Intelligence Platform (AIP), which is positively impacting the company’s commercial business.

Palantir points out that its commercial revenue grew 23% year over year last quarter to $251 million, with U.S.-specific commercial revenue increasing at a faster pace of 33%. What’s more, Palantir saw a terrific sequential jump of 65% in the number of commercial deals it closed last quarter. Also, its total customer count increased 34% from the prior-year period, suggesting that the demand for the company’s offerings remains strong.

AI seems to have played a key role in driving the impressive growth in these metrics, as evident on the latest earnings conference call with management noting that Palantir “almost tripled the number of AIP users last quarter and nearly 300 distinct organizations have used AIP since our launch just five months ago.”

Palantir is now looking to build upon this momentum as it plans to carry out AIP boot camps for more than 140 organizations this month to help them integrate AI into their operations. The company plans to help these organizations understand how AI could be deployed in critical operations of their businesses and then train and onboard users who could execute the application of this technology. Palantir claims that such a boot camp enables organizations to deploy AI within five days or less.

Such moves can help Palantir drive growth in customer spending. Palantir witnessed a 13% year-over-year jump in average trailing-12-month revenue by its top 20 customers last quarter to $54 million, and new solutions related to AI could accelerate this figure. All this explains why Palantir is anticipated to grow at a faster pace going forward, which should lead to solid stock upside as well.

PLTR Revenue Estimates for Next Fiscal Year data by YCharts.

How much upside can investors expect?

Palantir Technologies stock is trading at almost 20 times sales following its terrific surge in 2023. Its forward earnings multiple of 69 is also on the expensive side. However, it is worth noting that the top line has increased at a faster pace than the sales multiple over the past three years, indicating that the company has been able to justify its expensive valuation.

PLTR PS Ratio data by YCharts.

So, if Palantir’s sales growth accelerates over the next year to $2.63 billion and it continues to maintain its current price-to-sales ratio, its market capitalization could jump to $52 billion. That points toward a 30% jump from current levels. However, don’t be surprised to see this AI stock delivering stronger gains as its revenue growth has been exceeding expectations, and the same could happen over the next year as well. That’s why growth-oriented investors may want to consider Palantir’s stock now.

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

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