Palantir's TAM Is Expanding
Palantir's data-visualization competence and speed in locating patterns in large data sets are aiding its broader adoption as an analytics solution in a market that is predicted to grow at a CAGR of 5.6% to more than $35 billion by 2028.
Expansion in the commercial segment remains key to sustaining sales momentum in the near term, yet the less predictable government segment still accounts for around 55% of total revenue. In addition, Palantir's Foundry and Apollo solutions are broadening the company's addressable market beyond military, terrorist threats, cybersecurity, and fraud detection.
In addition, Palantir's leadership position in geographic data and pattern recognition should continue to set it apart from Microsoft, Qlik, and Salesforce.com analytics tools.
In 2021, $PLTR had less than 2% exposure to the $83 billion market for big data and analytics software. However, by 2027, the market is anticipated to increase at a CAGR of 9.96% to surpass $146 billion.
Palantir's US revenues remain modest compared to other fast-growing enterprise software companies. The development of Palantir's client base and the shortening of its sales cycles in the commercial sector will depend on the company's partnerships with hyper-scale cloud businesses in the United States.
For Palantir to continue growing in the commercial sector, where the addressable market is expected to be higher than in the government sector, it will need to form partnerships with system integrators like IBM and Fujitsu. In addition, now that Palantir has opened up its platform to developers, the company may see an increase in markets where its software is used.
Despite the growing concerns for the company's growth lately, the developing network effects, the growing economic moat, and the seasonally low $PLTR valuation create an excellent entry point for long-term investors.