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Palantir Technologies (PLTR) remains one of the most compelling tech stocks today. As an artificial intelligence (AI) powerhouse, the company is recognized for its expertise in big data analytics and securing government contracts. Palantir’s software solutions enable organizations to analyze complex data for more informed decision-making. With a foothold in both the public and private sectors, it has established itself as a leader in AI-driven analytics.
PLTR stock has been on an impressive upward trajectory, gaining significant attention after joining the S&P 500 Index ($SPX) and the Nasdaq-100 ($IUXX) last year. In 2024, Palantir’s stock skyrocketed by 356.1%, significantly outperforming the broader market. The key question now is whether Palantir can sustain its momentum in 2025 and whether it’s a good buy ahead of its upcoming fourth-quarter earnings report on Feb. 3.
Palantir’s Financials Continue to Impress
Palantir’s Artificial Intelligence Platform (AIP) has significantly reshaped its business. The company primarily generates revenue through government contracts, providing intelligence, defense, and cybersecurity solutions. Its platforms, including Gotham, are widely used by the U.S. government and allied nations to enhance national security, manage military data analytics, and support law enforcement. Additionally, Palantir has expanded internationally, securing contracts with foreign governments, such as Ukraine, which is leveraging its AI technology for humanitarian de-mining efforts.
Last year, Palantir expanded its long-standing partnership with the U.S. Army for a $618.9 million contract spanning up to four years. In the third quarter, the government segment contributed $408.3 million in revenue, accounting for 56% of total revenue — a 32.7% increase year-over-year. While this steady income stream provides financial stability, it also raises concerns about overreliance on government contracts.
To diversify its revenue base, Palantir has been expanding its commercial segment, offering its Foundry platform to businesses across industries like healthcare, finance, energy, and manufacturing. Foundry helps enterprises integrate, analyze, and visualize large datasets to optimize decision-making. Major clients include Oracle (ORCL), PwC, Microsoft (MSFT), and International Business Machines (IBM). In Q3, commercial revenue grew 26.6% year-over-year to $317.1 million, with U.S. commercial revenue expected to surge by at least 50% in 2024. Palantir’s total revenue for the quarter reached $725.5 million, marking a 30% increase, while GAAP profit grew 100% to $0.06 per share.
On the balance sheet, Palantir ended Q3 with $4.6 billion in cash, cash equivalents, and short-term U.S. Treasury securities. The company also generated $435 million in adjusted free cash flow and anticipates reaching approximately $1 billion in 2024. CEO Alex Karp emphasized Palantir’s ambitious vision, stating, “A juggernaut is emerging. This is the software century, and we intend to take the entire market.”
Palantir is set to release its fourth-quarter earnings on Feb. 3. Management forecasts revenue between $767 million and $771 million, reflecting roughly 26% year-over-year growth. The company also anticipates reporting GAAP profitability for the quarter. Analysts, however, have slightly higher expectations, projecting $776.8 million in revenue and earnings of $0.11 per share, up from adjusted EPS of $0.08 in Q4 2023.
Is PLTR Stock a Buy, Hold, or Sell?
Overall, Wall Street maintains a neutral stance on Palantir stock, largely due to its high valuation. On average, PLTR is rated as a “Hold.” Among the 18 analysts covering the stock, two recommend a “Strong Buy,” nine suggest holding, two classify it as a “Moderate Sell,” and five have given it a “Strong Sell” rating. Palantir’s impressive performance over the past year has pushed its stock price beyond both its average target of $47.29 and the highest analyst estimate of $90.
Palantir’s partnerships with government agencies are a positive sign. While these contracts offer financial stability, relying too heavily on them poses a potential risk, especially if budget cuts or policy shifts affect renewals. To mitigate this, Palantir is actively expanding its presence in the commercial sector, focusing on industries with high demand for advanced data analytics. Successfully growing its enterprise customer base could help the company with revenue diversification and lessen its dependence on government contracts.
The Key Takeaway
Although analysts remain cautious about PLTR’s stock due to its lofty valuation, its stock performance reflects investors enthusiasm and trust in the company’s potential. If Palantir can scale its commercial business and maintain profitability, PLTR stock could offer substantial upside to long-term investors with a high risk tolerance, especially as AI adoption continues to gain momentum.
