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Palantir Technologies (PLTR) had an incredible 2024, with its stock shooting up 340%, making it the best performer in the S&P 500 Index ($SPX) and the third-best in the Nasdaq-100 Index ($IUXX). This huge jump came from growing demand for its AI solutions, an uptick in government contracts, and smart moves in the commercial space.
The company’s success is tied to artificial intelligence (AI), which dominated investments in 2024. While giants like Nvidia (NVDA) and Microsoft (MSFT) led early on, Palantir stood out by using its platforms — Gotham for government clients and Foundry for businesses — to deliver powerful AI tools.
Palantir’s alignment with federal priorities under President Donald Trump’s administration has significantly benefited the company, enabling it to secure multiple deals since November.
Still, Palantir isn’t without challenges. Concerns about its high valuation and market volatility remain, and while U.S. commercial revenue grew 54% year-over-year in the third quarter of 2024, international growth has been slower, which could be a weak spot. With its next earnings report set for Feb. 3, 2025, let’s take a closer look at whether Palantir is positioned to capitalize on what analysts are calling a “tidal wave” of federal spending in the AI sector while addressing concerns about sustainability and valuation.
Palantir’s Financial Performance
Palantir Technologies (PLTR), known for its expertise in data analytics and artificial intelligence, has made a name for itself by providing software solutions to government and commercial clients. Its key platforms, Gotham and Foundry, help organizations analyze massive amounts of data to make better decisions. With federal spending on AI ramping up through initiatives like the $500 billion Stargate Project, Palantir is well-positioned to benefit from a surge in government investment.
This momentum is reflected in the company’s recent performance. Over the past year, Palantir’s stock skyrocketed by 361.41%, reaching a 52-week high of $84.80 on Dec. 24, 2024, after bouncing back from a low of $16.03 in February. That said, 2025 has started off more cautiously.
Recent weeks have been volatile, with a dip to $63.40 in mid-January followed by a recovery to $82.24 on Jan. 24, showing a mix of optimism and caution as investors await its Q4 earnings report on Feb. 3.
Palantir’s last report was impressive. In Q3 2024, revenue jumped 30% year-over-year to $726 million, fueled by U.S. growth of 44%. U.S. commercial revenue surged 54%, while U.S. government revenue grew 40%. Analysts believe projects like Stargate could unlock billions more in revenue over the next decade. The company also reported GAAP net income of $144 million (20% margin), adjusted operating income of $276 million (38% margin), and closed 104 deals worth over $1 million while growing its customer base by 39% year-over-year.
Still, Palantir’s valuation raises questions. Its forward price-earnings (P/E) ratio of 197.12x is far above the sector average of 25.16x, leaving some analysts skeptical about whether its fundamentals justify these numbers.
While bullish investors argue that Palantir’s unique position in AI and growth potential warrant the premium, critics warn that missing earnings expectations or delays in contracts could lead to sharp pullbacks. Even so, as federal spending grows, many believe Palantir is primed to ride this “tidal wave” of opportunity.
Palantir’s Growth Catalysts
Palantir’s growth is largely driven by its ability to land big contracts and expand its AI solutions across different industries. One standout example is its recent $400 million deal with the U.S. Army to extend the Army Vantage program. This highlights how important Palantir has become in modernizing military operations. Its software helps improve data management, logistics, and decision-making, making it a key partner for the Department of Defense.
With the contract’s ceiling value set at over $618 million, Palantir is well-positioned to benefit as defense budgets increasingly focus on technology and AI.
But it’s not just government work where Palantir is making an impact. Its partnership with Pray.com shows how its AI tools are solving practical problems in the commercial world too. Pray.com used Palantir’s Ontology Software Development Kit (OSDK) to automate language translation, cutting costs and saving time while maintaining high-quality results.
These developments underline Palantir’s two main growth drivers — government and commercial markets — both of which are thriving as AI adoption grows. With federal spending increasing and new commercial applications emerging, Palantir seems well-positioned to take advantage of the opportunities ahead.
Analysts Weigh In on Palantir’s Momentum
Palantir has set some bold targets showing confidence in its ability to keep growing. For Q4 2024, the company expects revenue between $767 million and $771 million, with adjusted income from operations reaching up to $302 million. For the full year, it has raised its revenue guidance to as high as $2.809 billion, U.S. commercial revenue expected to grow by at least 50%. Palantir also anticipates generating over $1 billion in adjusted free cash flow.
Even with these projections, analysts are cautious about the stock’s valuation and future momentum. Of the 18 analysts covering Palantir, most lean toward a “Hold” rating. The average price target is $47.29, far below the current price near $80.
This split between Palantir’s market performance and analyst sentiment shows the ongoing debate about its high valuation. Some see big opportunities tied to federal spending and AI adoption, while others worry it may already be overpriced. Wedbush recently raised its price target from $75 to $90, citing government contracts and a growing commercial footprint as reasons for optimism.
However, insider activity has raised eyebrows. Over the past year, insiders have sold approximately $2.52 billion worth of shares, including significant transactions by executives such as CFO David Glazer and President Stephen Cohen. While such sales could be routine, their scale has sparked questions about insider confidence in the stock’s current valuation.
With Palantir’s Q4 earnings report coming up on Feb. 3, all eyes are on whether it can deliver results that justify its lofty expectations.
The Bottom Line on Palantir Stock
Palantir’s unique positioning at the intersection of federal spending and AI innovation makes it a compelling story for investors, despite its lofty valuation and mixed analyst sentiment. With major government contracts like the U.S. Army Vantage deal and growing commercial adoption of its AI solutions, the company is poised to ride a wave of opportunity in both sectors. As earnings approach and the market weighs its potential, Palantir remains a stock to watch for those betting on the future of data-driven decision-making.
