Palantir Technologies (NASDAQ:PLTR) Shares rose sharply on Friday, rising as much as 5.8%. At 3:13 PM ET, the stock was still up 4.6%.
The catalyst that took the artificial intelligence (AI) software and data mining specialist to the next level was a lawsuit that went in the company’s favor.
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Palantir is embroiled in a bitter lawsuit with several former employees who left the company to join rival AI startup Percepta. Palantir alleged that Percepta CEO Hirsh Jain, co-founder Radha Jain (no relation), and employee Joanna Cohen violated Palantir’s confidentiality agreement, stole proprietary data, and engaged in employee poaching.
In a confidential ruling last month, U.S. District Court Judge J. Paul Oetken ruled that the three former Palantir employees had “likely” violated the terms of their agreement not to use confidential information and employ Palantir personnel. At the time, the judge upheld the decision to allow Palantir and Percepta to redact sensitive personal and business information.
The verdict was made public late yesterday, showing that the judge ordered Palantir’s former employees to stop using the company’s data and refrain from poaching its employees, saying Palantir would likely suffer “irreparable harm.”
The judge also found that Cohen sent herself company documents, downloaded files to her phone and accessed confidential documents outside her authority at the company. These actions led to a computer alert at Palantir, which led to the legal battle.
Palantir’s AI and data analytics systems have seen unprecedented adoption in recent years, fueling its rampant success. In the fourth quarter, revenues of $1.4 billion grew 70% year over year, while U.S. commercial segment revenues rose 137%. It’s easy to see why rivals would be eager to copy Palantir’s success and even go to extraordinary lengths to do so.
This marks an important legal victory for Palantir, allowing the company to maintain its competitive advantage.
Palantir’s valuation is pricey: 115 times forward earnings (at the time of writing). That said, given its leading technology, rising revenue and earnings growth, and long-term tailwinds, I’d say the stock is a buy.
