There's plenty for bulls and bears to hash out over Palantir Technologies. Bulls point to improved profitability for PLTR stock. Bears focus on sustained revenue growth for Palantir stock. Then, there's buzz over artificial intelligence stocks to consider for the maker of data analytics software.
Palantir stock suddenly pulled back on Feb. 19 after hitting new all-time highs, ostensibly tied to possible Department of Defense budget cuts. With the retreat on Feb. 19, Palantir stock has gained 48% in 2025.
Wedbush analyst Daniel Ives said the market reaction was overblown.
"PLTR stock was under pressure yesterday after the Trump Administration announced a new five-year plan that would cut defense spending by 8% annually ($290 billion) to reshape military end-strength and readiness over the coming years," Ives said in a report. "The bears which have hated Palantir from $12 to $120 in the last 18 months now have found their latest 'silver bullet' negative thesis around PLTR being exposed to these budget cuts and we saw a sharp sell-off in trading accordingly once this news about DOD hit in the afternoon. This is exactly the opposite how we believe these DOD cuts will play out. In our view, Palantir's unique software approach will enable the company to gain more IT budget dollars at the Pentagon — not less despite these initial knee jerk reactions from Wall Street."
Palantir Annual Report
PLTR stock hit an all-time intraday high of 125 on Tuesday Feb. 18 and closed at 124.62.
Meanwhile, Palantir has filed its annual report. Here's a link to SEC filing.
Among the key takeaways, said Jefferies analyst Brent Thill in a report: Palantir's 2024 employees increased only by 5% amid stepped up marketing in artificial intelligence. He added: "U.S. revenue accelerated to 38% in 2024 vs 32% in 2023 and represents 66% of total revenue mix. Non-U.S. revenue grew 14% in 2024 vs 14% in 2023."
Thill added: "On Dec. 11, 2024, CEO Alex Karp adopted a Rule 10b5-1 trading arrangement providing for the potential sale of shares of Class A common stock, with 9.975 million shares being the maximum number. The duration of the trading arrangement is until Sept. 12, 2025, or earlier."
Also, Palantir stock jumped on its fourth quarter earnings report and 2025 revenue outlook as Karp declared: "A software juggernaut has indeed emerged."
In Q4, US. commercial revenue grew 64% year-over-year to $214 million. U.S. government revenue grew 45% to $343 million.
For 2025, Wall Street currently projects EPS of 53 cents, up 29%, with revenue growing 31% to $3.754 billion.
Also, PLTR stock ranks No. 4 on the IBD 50 roster of growth stocks. And, Palantir is among AI stocks to watch.
Further, Palantir stock advanced 340% in 2024, with much of the gain coming after Donald Trump's Presidential election win.
Trump Administration 2.0
Several members of the incoming Trump administration have ties to Palantir, a company co-founded by longtime venture capitalist Peter Thiel. They include David Sacks, tapped as White House artificial intelligence and crypto czar. Tech industry maverick Elon Musk, Sacks and Thiel helped launch PayPal, becoming part of the so-called PayPal Mafia. Musk is a key Trump advisor.
According to a Financial Times report, Palantir is getting a life from a "revolving door" of executives and officials passing between the company and high level government positions in the U.S. and U.K.
Also, Bloomberg reported that a former Palantir executive is now chief information officer at the U.S. Department of Health and Human Services.
Palantir has provided data analytics tools to government customers for intelligence gathering, counterterrorism and military purposes. Now Palantir aims to use generative AI to spur growth in the U.S. commercial market.
One reason for Palantir's post-election rally could be views that artificial intelligence will play a bigger role in homeland security or defense spending.
Palantir Stock: Defense Business News
Palantir recently announced an artificial intelligence deal with Elon Musk's xAI, which has built an AI training models called Grok.
In November, Palantir and startup Anthropic announced a partnership with Amazon Web Services to provide U.S. intelligence and defense agencies access to Claude 3 AI models.
According to a report, Palantir and startup Anduril Industries are talking with many other tech companies, including OpenAI and Elon Musk's SpaceX, to form a consortium to jointly bid on U.S. government contracts.
Palantir is in talks to invest in drone and software maker Shield AI in its next funding round, according to the Information.
In December, the federal government gave Palantir a higher rating for secure cloud computing services. And, Palantir announced a partnership with Booz Allen Hamilton, a competitor in some government and defense services.
In October, Palantir formed an alliance with defense firm L3Harris.
PLTR Stock: High Valuation An Issue?
The company continues to make progress with its "Artificial Intelligence Platform," initially rolled out in early 2023. Palantir hosted its fifth AIP event in September.
At AIPCon 5, clients such as the National Geospatial-Intelligence Agency, Aramark, and Mount Sinai demonstrated Palantir AI technologies in better supply chain management, operational efficiencies and health patient care.
However, Palantir has not disclosed pricing for AI products. Some analysts say Palantir needs to show more revenue progress with generative AI commercial deployments.
Still, Wall Street analysts now do not expect most software makers to monetize generative AI, or "conversational AI," in a material way until late 2025 or 2026.
Palantir Stock Fundamentals
On the news front, there's plenty for investors to mull. Oracle and Palantir announced a cloud computing alliance.
The Denver-based company offers three platforms. One is Palantir Gotham, used primarily by government agencies. There's Palantir Metropolis for banks, financial services firms and hedge funds. And Palantir Foundry is used by corporate clients.
Palantir gets nearly 60% of its revenue from government agencies. Decelerating revenue growth is an issue. In 2022, revenue growth slowed to 24% from 40% in 2021 and 47% in 2020. In 2023, revenue grew 17% year-over-year to $2.23 billion.
PLTR Stock Technical Analysis
Meanwhile, IBD doesn't put much weight on P/E ratios and other valuation metrics. On the other hand, here are some time-tested trading rules.
Meanwhile, Palantir's Relative Strength Rating stands at 99 out of a best-possible 99.
Also, Palantir stock holds a Composite Rating of 99 out of a best-possible 99, according to IBD Stock Check-up. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
PLTR stock holds an Accumulation/Distribution Rating of A. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
Also, as of Feb. 20, Palantir stock is extended. It needs to form a base to be actionable, according to MarketSurge.
Some investors may want to take profits.
Investors can sign up for news alerts from Palantir investor relations department here.
Further, check out IBD Stock Lists and other IBD content to find dozens more of the best stocks to buy or watch.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
