After surging more than 300% in 2024, Palantir (PLTR) has significantly underperformed the broader markets in the year to date. Valued at a market capitalization of $202 billion, Palantir stock is down almost 35% from its all-time high due to concerns over its valuations and the ongoing trade war.
However, investors are worried that potential federal spending cuts could threaten its largest customer base, as government sales accounted for 40% of the top line in Q4. According to an article from The Motley Fool, Palantir’s pricy products (averaging $4 million per customer) may face reduced demand during economic uncertainty. Finally, the stock’s extremely high price-sales ratio of over 60x makes it vulnerable to further corrections.
So, let’s see if PLTR stock is a buy, sell, or hold in March 2025.
Palantir Reports Record Q4 Results Fueled by U.S. Growth, AI Momentum
Palantir delivered solid results in Q4 2024, driven by an acceleration in revenue growth and margin expansion. The data analytics giant reported revenue of $828 million, up 36% year-over-year and 14% quarter-over-quarter, exceeding analysts’ expectations.
Its U.S. business emerged as the primary growth driver, with U.S. commercial revenue surging 64% year-over-year and 20% quarter-over-quarter to $214 million. U.S. government revenue also showed robust growth, increasing 45% year-over-year to $343 million. Total U.S. revenue grew 52% year-over-year to $558 million, representing more than two-thirds of total revenue.
Palantir closed a record-setting $803 million in U.S. commercial total contract value (TCV) during Q4, up 134% year-over-year. In comparison, U.S. commercial remaining deal value (RDV) grew 99% year-over-year to $1.79 billion. This commercial momentum stems from the company’s artificial intelligence platform (AIP) gaining traction among enterprise customers.
Palantir’s customer base expanded 43% year-over-year to 711, with U.S. commercial customers growing 73% to 382. Its net dollar retention remained strong at 120%, indicating existing customers are significantly expanding their Palantir deployments.
Profitability metrics improved steadily, with adjusted operating income reaching $373 million, indicating a 45% margin, up from 34% in the year-ago quarter. Its adjusted free cash flow grew to $517 million (63% margin), demonstrating strong cash generation capabilities.
For Q1, Palantir forecasts revenue between $858 million and 862 million and adjusted operating income of $354 million and 358 million. The full-year 2025 outlook includes revenue of $3.75 billion, with U.S. commercial revenue expected to exceed $1.08 billion (54%+ growth) and adjusted free cash flow between $1.5 and 1.7 billion.
Is PLTR Stock a Good Buy Right Now?
Despite these results, investors should consider specific risks. While U.S. growth is robust, international expansion could face headwinds from geopolitical tensions. Further, AIP’s rapid growth might eventually moderate as the initial wave of early adopters stabilizes.
With $5.2 billion in cash and no debt, Palantir has the financial flexibility to invest in growth initiatives. Despite Palantir’s competitive position in AI and data mining, its premium valuation and macroeconomic uncertainty create downside risk for investors in the near term.
Out of the 19 analysts covering PLTR stock, three recommend “Strong Buy,” 11 recommend “Hold,” one recommends “Moderate Sell,” and four recommend “Strong Sell.” The average target price for PLTR stock is $85.11, below the current trading price.
