How could the Palantir Technologies-Oracle deal give this artificial intelligence (AI) stock a solid boost?

Palantir Technologies (NYSE: PLTR)'s stock has made a splash in the market over the past year with a gain of 1,82%, and artificial intelligence (AI) has played a crucial role in fueling this red-hot rally.

For example, in February, Palantir's stock price surged impressively after it announced its Q4 2023 financial results. Wall Street applauded the company's industry results for the quarter, thanks in large part to the growing adoption of its Artificial Intelligence Platform (AIP) by a growing number of business customers. Now, Palantir appears to have taken another solid step forward by partnering with cloud computing giantOracle Corporation (NYSE: ORCL)carriers to monetize the growing demand for AI software platforms.

Let's take a closer look at this development and see what benefits it will bring to Palantir's investors in the long run.

Oracle's Cloud Computing Deployment Accelerates Adoption of Palantir's Artificial Intelligence Software Platform

Palantir and Oracle are "delivering secure cloud and AI solutions designed to support businesses and governments around the world". More specifically, Palantir's enterprise-focused data analytics platform Foundry, its government-focused platform Gotham, and its increasingly popular AIP, which allows business customers to deploy large-scale language models and other AI applications, will now be available through Oracle's cloud infrastructure.

Notably, Palantir's AIP has been in high demand lately. The company has been running boot camps so that potential customers can learn how AI integration can improve their operations. The strategy has paid off. Palantir's U.S. commercial revenue grew 70% year-over-year in the fourth quarter of 2023, driven by a 55% increase in customer volume.

At the same time, commercial revenue for the quarter grew by $32% and customer count grew by $44% year-over-year.Palantir closed 103 deals worth at least $1 million at the end of the quarter, a significant increase from the same period last year when it closed 55 deals worth at least $1 million. This represents a significant increase from the same period last year, when 55 deals valued at at least $1 million were completed. The collaboration with Oracle is likely to increase Palantir's deal activity, as Oracle's AI-focused cloud computing products are currently in high demand.

In its Q3 FY2024 financial results, Oracle noted that it expects to "continue to receive large amounts of bookings for cloud infrastructure capacity as demand outstrips supply for our second-generation AI infrastructure." This strong AI-related demand drove the company's vested performance obligations up 29% to a record $80 billion in the last quarter, suggesting that the popularity of AI is helping Oracle build a solid revenue koon.

Notably, Oracle's cloud business grew 25% year-over-year last quarter, up fromAmazonNetwork Services (Amazon(Web Services) andAlphabetOracle is looking to expand the capacity of its data centers, and has budgeted $10 billion in capital expenditures to bring more capacity online. Happily, Oracle is looking to expand the capacity of its data centers, and has outlined a $10 billion capital expenditure budget for more capacity online.

The expansion of Oracle's cloud infrastructure footprint should ideally provide a tailwind for Palantir. Investors should note that Oracle already offers public cloud services in 48 territories in 24 countries, so its footprint is well established. The company also has separate regions for the governments of the European Union, the United States, the United Kingdom and Australia.

In total, given the rapid growth of AI in the cloud in the future, this partnership could be a win-win for Palantir. More specifically, the cloud AI market is projected to grow at an annualized rate of nearly 36% by 2032, so it's not surprising that Palantir's AI offerings will gain more attention in the future.

Palantir on track for faster growth

We've already seen how artificial intelligence is driving growth in Palantir's commercial business. Now, the widespread adoption of AI solutions will help accelerate the company's revenue and earnings growth.

Palantir's revenue in 2023 grew 17% to $2.23B. Analysts forecast the company's revenue to grow 22% this year to $2.71B. However, with the establishment of a name partnership with Oracle, one cannot rule out the possibility that Palantir will grow faster than analysts expect. If that happens, the market could give the AI stock more upside, which is why investors should consider buying more shares of Palantir before it continues to move higher after already having risen a solid 34% in 2024.

Should you invest $1,000 in Palantir Technologies now?

Before buying shares of Palantir Technologies, consider the following:

Motley Fool Stock AdvisorThe analyst team has just selected what they think is the best name for investors to buy now.10Only ...... and Palantir Technologies were not included. The 10 stocks that made the list could generate huge returns in the coming years.

Stock AdvisorIt provides investors with an easy-to-understand blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. Since 2002, StockAdvisorThe service has more than doubled the return on the S&P 500 Index.

View 10 stocks only

*Stock Advisory Rates as of April 8, 2024

Suzanne Frey, an Alphabet executive, is a member of The Motley Fool. John Mackey, former chief executive officer of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's Board of Directors. Harsh Chauhan has no position in any of the stocks mentioned above. The Motley Fool has holdings in the stocks of Alphabet, Amazon, Oracle, and Palantir Technologies. The Motley Fool has a disclosure policy.

Why Palantir Technologies' Deal With Oracle Could Give This Artificial Intelligence (AI) Stock a Solid Boost?