Will Palantir Surge After Aug. 4? History's Answer Is Strikingly Clear.

Key Points

• Palantir stock has soared more than 1,000% in just a few years.

• Revenue also has climbed as customers rush to get in on Palantir’s AI platform.

• 10 stocks we like better than Palantir Technologies ›

Palantir Technologies (NASDAQ: PLTR) has been one of the early winners of the artificial intelligence (AI) revolution, and this streak could keep going. Demand has skyrocketed for its AI-powered software platform -- one that's helping governments and commercial customers make game-changing moves. As a result, government and commercial revenue each have been climbing in the double digits quarter after quarter.

Since these customers are in the early days of AI adoption, investors can expect more growth for Palantir. Analyst forecasts for AI expansion support this, too, with the overall AI market expected to increase from the billions of dollars today to beyond $2 trillion in just a few years.

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Investors clearly are excited about all of this as they've piled into Palantir's stock, helping it to soar 1,300% over the past three years. Now, with a catalyst just ahead, you might be wondering if additional gains lie right around the corner -- and whether you should buy the stock. I'll turn to history for some answers.

Image source: Getty Images.

Serving government and commercial customers

First, though, it's worth taking a look at how this 20-year-old company soared into the spotlight in recent times. Years ago, Palantir generated most of its growth through government contracts. Today, that remains a key part of the company's business, but the AI boom has helped this tech player reach a broader range of customers. Now, as companies and organizations aim to apply AI to their businesses, they're seeking out Palantir.

This software company is in the business of helping customers aggregate and make better use of their data -- even data that's otherwise been inaccessible. Just two years ago, Palantir launched its Artificial Intelligence Platform, or AIP, leveraging the power of AI.

Here are a couple of examples of how this works. United Airlines used AIP to gather maintenance write-ups over the past decade and develop a predictive maintenance system for its fleet, and the Cleveland Clinic is relying on AIP to optimize patient placement and general efficiency. AIP can be a strong ally for governments, too, with its ability to highlight potential decisions and outcomes on the battlefield, for instance.

All of this has helped power Palantir's earnings higher in recent quarters. In the latest period, the company reported a 71% gain in U.S. commercial revenue, a 45% increase in U.S. government revenue, and raised forecasts for full-year revenue, adjusted income from operations, and adjusted free cash flow. Chief executive officer Alex Karp said there has been a "stampede" toward AI that's been driving demand for Palantir's offerings, and I think it could continue to do so.

A potential catalyst on Aug. 4

That brings me to what's happening on Aug. 4. On that day, Palantir will announce second-quarter earnings. Considering the company's strength so far when it comes to earnings and stock performance, you may be wondering whether the stock will roar higher after the report. History shows us that Palantir stock has performed as follows in the two-month period after the past six reports:

History's answer is strikingly clear: If Palantir follows the historical trend, it may soar in the weeks following its upcoming earnings report. That's fantastic news for Palantir's current shareholders or anyone who buys the stock in the days to come -- but it's important to remember a couple of things.

First, though history may offer us clues about what might happen next, stocks don't always follow their historical trends -- they can surprise us. This means it's not a good idea to rush into Palantir today with the hope of scoring a quick gain.

Holding for the long term

Second, whether Palantir bursts higher or not over the coming months won't impact overall performance by much if you hold onto the stock for a number of years. This means you don't have to rush into the stock at one particular moment to get in before a catalyst arrives.

Considering all of this, is Palantir a buy? That depends on your investment style.

Palantir's gains have resulted in a sky-high valuation, so it's not the best fit for value investors. As a growth stock, it's vulnerable to swings in sentiment and economic data, so very cautious investors might also remain on the sidelines or limit their purchase to a small number of shares.

However, for investors focused on growth, Palantir makes a fantastic buy today -- whether it soars after Aug. 4 or not -- as it still may be in its early days of development in the explosive AI market.

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Adria Cimino 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.