This particular sector is an important service for many modern businesses as the process of data mining takes raw data and turns it into something much easier to digitize and work with. Many companies utilize this type of service as a way to understand how best to improve the inner workings of their business.
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Palantir is a highly-controversial company that specializes in data mining. It is controversial because it mainly works with governmental agencies and more specifically, it has had a hand in the widely criticized U.S. deportation scheme ran by ICE as well as Britain’s post-Brexit immigration policies. Whilst Palantir has a unique set of technology on offer which is more suited to large corporations, it will need to expand into the private sector as it currently faces a PR nightmare of public backlash.
However, with 68% of its revenue only being generated by 20 of its top clients, Palantir is facing tough competition in this data mining space. Below you can find two of its top rivals in this industry.
Alteryx (NYSE: AYX) does not make quite as many headlines as other software as a service (SaaS) companies that make headlines such as Zoom and Atlassian, but it is a stock worth thinking about as an investor. As a stock in a high growth sector, this data company could be a good addition to your portfolio.
What makes Alteryx a serious competitor to Palantir is its excellence in data science and analytics conversions into easily accessible formats for any data worker to use. Amongst its customers, it can count manufacturing icon Hyundai, Chick-fil-a, Barnes & Noble, Cisco, and Coca Cola. In fact, Coca-Cola’s senior business analytics manager downloaded Alteryx as a trial to solve a problem he himself could not solve. From then on he was a fanboy and kept up a subscription with this data company. If that isn’t a convincing advertisement, I don’t know what is…
However, the COVID-19 pandemic has not been too kind for Alteryx as its stock has been rather volatile over the last year. This volatility was caused in part by a lower than expected Q2 growth at only 17% and a low forecast for the second half of the year. For a company that has seen 69% compound annual growth for the three years running up to 2020, this was quite a shock to its investors.
As COVID-19 related restrictions begin to ease however and businesses start to come back to full operations, this company is likely to see its volatility reduce and growth continue as normal.
IBM (NYSE: IBM) is one of the most widely-renowned technology companies around and sells everything from hardware and software to cloud computing services. As the complete antithesis to Palantir, IBM has developed for itself a culture of trust among customers and partners alike, thanks largely in part to its longevity in the tech sector and first-mover advantage in computing. This reputation in itself could present serious competition to Palantir as IBM has a much larger reach in the global private sector.
IBM hasn’t been at its heights of late though, with its stock gradually declining in recent years as it struggles to keep up with tech competitors. Recently, IBM released its 4th quarter results that investors were less than happy about, despite becoming used to such disappointment. Having reported adjusted earnings of $2.07 and revenue of $20.37 billion, the company’s revenue was down 6% year-over-year (YoY) whilst its earnings were down 56%. Whilst its stock dropped in response to this news, the results were not surprising due to the pandemic-filled year we have all just experienced and IBM’s current restructuring business plan where major shifts in operations have adversely affected its revenue.
Moving forward over the next year, IBM plans to focus more on cloud technology and AI services, which means that it will be spinning off its $19 billion technology consulting business as a separate entity. By refocusing on cloud computing and data, IBM could become the first in line for many businesses looking for cloud computing solutions and data analysis to go along with that.
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