Why Palantir Technologies Charged Higher on Monday

Key Points

• Palantir stock got a boost from a new partnership.

• This latest collaboration opens up a new, potentially lucrative opportunity.

• While the future looks bright, the stock remains pricey.

• 10 stocks we like better than Palantir Technologies ›

Palantir Technologies (NASDAQ: PLTR) stock surged sharply higher to start the week, gaining as much as 6%. As of 11:44 a.m. ET, it was still up 5.4%.

The artificial intelligence (AI) software and data mining specialist rallied to a new all-time high late last week, before giving back some of its gains. However, investors were more bullish on Monday as the company announced a new catalyst for its business.

Another partnership

Palantir and Accenture Federal Services announced what the pair called a "landmark strategic partnership" designed to "help federal government agencies reinvent operations with AI." As part of the collaboration, Accenture Federal was named as a Palantir preferred implementation partner for U.S. federal government customers.

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The pair will design and deploy a full range of commercial-grade AI-powered solutions for federal agencies, aimed at providing them with the most AI bang for their buck. To that end, Palantir will train and certify more than 1,000 of Accenture's data and AI professionals on the intricacies of the Palantir Foundry platform and its Artificial Intelligence Platform (AIP), opening up a whole new market for its products.

While the news is certainly good, it must be taken in the context of the company's valuation. Palantir's market cap currently clocks in at $323 billion, and the stock is selling for 225 times this year's expected earnings and 79 times expected sales. As such, the stock's future performance will be highly dependent on its continued growth. Furthermore, any failure on Palantir's part -- real or perceived -- to meet investors' lofty expectations could bring the stock crashing down.

I'm an unadulterated Palantir bull and believe the future looks bright, but investors should approach Palantir with caution, given the stock's current valuation.

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Danny Vena has positions in Palantir Technologies. The Motley Fool has positions in and recommends Accenture Plc and Palantir Technologies. The Motley Fool has a disclosure policy.

Why Palantir Technologies Charged Higher on Monday was originally published by The Motley Fool