/Palantir%20by%20rblfmr%20via%20Shutterstock.jpg)
Several tech stocks are under pressure in 2025 as investors are worried about lofty valuations, slowing growth, and the ongoing tariff war. While the tech-heavy Nasdaq-100 Index ($IUXX) is down over 8% from its all-time highs, growth stocks such as Palantir (PLTR) have experienced even higher drawdowns.
Palantir was the best-performing S&P 500 ($SPX) stock in 2024, rising 340%. Today, it trades 32% below its all-time highs, valuing the company at a market cap of $193 billion. Despite the pullback, Palantir stock is priced at 286x forward earnings, which is still incredibly steep. However, Morgan Stanley analyst Sanjit Singh has raised his price target for Palantir Technologies from $95 to $115 while maintaining a “Buy” rating. The new target suggests 30% upside from current levels.
Singh’s outlook shifted positively following Palantir management’s presentation at the recent ICR conference. He cited Palantir’s better-than-expected growth potential, as it expects to grow its top line by 30% in 2025, up from 28.8% in 2024 and 16.7% in 2023.
According to a report from TipRanks, two months ago, Singh held a “Sell” rating on the tech stock and a $60 price target. After its strong Q4 earnings report in February, he upgraded Palantir to “Hold” with a $95 target before making his most recent adjustment.
Despite investor concerns about potential defense budget cuts affecting Palantir’s growth, its widening product suite — including Foundry, Gotham, Edge AI, and AIP — continues to see strong demand due to its advanced AI capabilities.
Palantir’s Strong End to 2024
In the fourth quarter of 2024, Palantir reported record revenue of $828 million, an increase of 36% year-over-year as it positions itself at the center of the AI revolution. Its U.S. business has become a key growth engine, accounting for 66% of total sales, with revenue reaching $1.9 billion for the year. Palantir’s U.S. commercial segment was most impressive, growing 64% year-over-year and 20% quarter-over-quarter to $214 million. Meanwhile, U.S. government revenue increased 45% to $343 million, pushing annual government sales to $1.2 billion.
“We have the products and reach of an established incumbent and the speed, growth, and agility of an insurgent startup,” CEO Alex Karp noted in the shareholder letter, calling it “that most lethal of combinations.”
Palantir’s financial metrics reflect its strengthening position. Cash from operations reached $460 million, indicating a 56% margin, while adjusted free cash flow stood at $517 million. When one-time expenses related to stock appreciation rights (SARs) were excluded, net income was $165 million, representing a 20% margin.
Deal momentum accelerated significantly as Palantir closed 129 deals worth at least $1 million, including 32 deals exceeding $10 million in Q4. The total value of U.S. commercial contracts reached $803 million, surging 134% year-over-year and 170% quarter-over-quarter, while customer count grew 43% year over year.
Is PLTR Stock a Good Buy Right Now?
Palantir is a profitable growth stock experiencing an acceleration in top-line growth. Analysts expect its free cash flow to improve from $1.14 billion in 2024 to $1.5 billion in 2025. So, priced at 133x forward FCF, PLTR stock trades at a premium.
Out of the 19 analysts tracking PLTR stock, three recommend “Strong Buy,” 10 recommend “Hold,” one recommends “Moderate Sell,” and five recommend “Strong Sell.” The tech stock’s average target price is $85.11, similar to its current trading price.
Karp’s letter reflected on Palantir’s contrarian journey over its two-decade history, noting how the company faced skepticism for focusing on enterprise software for defense and intelligence agencies while others chased consumer internet trends. “Our patience, and what some would fairly describe as our disregard for the received wisdom, has been rewarded,” he wrote.
Karp emphasized that the company is still at “the beginning of the first act of a revolution that will play out over years and decades,” suggesting that Palantir’s growth trajectory has substantial runway ahead as its AI-powered solutions continue to gain traction across commercial and government sectors.
