Shares in Palantir Technologies surged on Tuesday after the software maker reported December quarter earnings and revenue that handily beat Wall Street estimates amid strength in its U.S. government and commercial businesses. Full-year 2025 revenue guidance for Palantir stock beat expectations amid buzz over artificial intelligence stocks.
On the stock market today, Palantir stock jumped nearly 22% to near 102 in midday trading.
At Bank of America, analyst Mariana Mora on Tuesday raised her price target on Palantir stock to 125 from 90.
"With the AI market becoming more crowded with more commoditized solutions, we think Palantir's value proposition is only becoming more pronounced," Mora said in a report. "Palantir's focus on operationalizing data, establishing high-fidelity digital enterprise-twins, and accelerating decision making is a winning formula."
Meanwhile, Morgan Stanley on Tuesday upgraded Palantir stock to equal weight from under weight.
"The business we have built has now developed its own internal momentum and strength, its own interior life and forms of untamed organic growth, with the output that we are seeing far surpassing what we are investing," said Chief Executive Alex Karp in a letter to shareholders.
He added: "A software juggernaut has indeed emerged."
On the Palantir earnings call with Wall Street analysts, the software maker's chief technology officer warned on U.S. competition with China on artificial intelligence.
Reported after the market close on Monday, Palantir earnings for the fourth quarter were 14 cents on an adjusted basis, up 75% from 8 cents a year earlier. Revenue climbed 36% to $828 million, the maker of data analytics software said.
Analysts had predicted earnings of 11 cents a share on revenue of $776 million for PLTR stock.
In Q4, US. commercial revenue grew 64% year-over-year to $214 million. U.S. government revenue grew 45% to $343 million.
"Results were driven be strength across both commercial and government segments with management citing an ongoing 'AI Revolution' happening in the U.S.," said Deutsche Bank analyst Brad Zelnick in a report. "Leverage in operating margin was also impressive with 45% adjusted operating margins, six points better than expected, and now at a level comparable with leading, scaled players within the software industry."
Zelnick maintains a sell rating based on valuation and the trading multiple of PLTR stock.
At UBS, analyst Karl Kierstead maintains a neutral rating amid the Q4 beat.
"Palantir reported numbers that stood in sharp contrast to the mixed results from Microsoft and ServiceNow last week, marked by 36% total revenue growth, an unusually high 7.3% revenue beat, all of which flowed through to material margin/cash flow beats."
PLTR Stock: 2025 Guidance Above Views
For full-year 2025, Palantir said it expects revenue in a range of $3.74 billion to $3.75 billion. Analysts had predicted sales of $3.5 billion, or 24.6% growth.
In 2025, Palantir forecast 54% U.S. commercial revenue growth.
At Mizuho Securities, analyst Gregg Moskowitz maintains an under-perform rating amid the lofty valuation of Palantir stock.
"Palantir has dramatically spiked over the past few months and currently trades at 56 times 2026 revenue estimates for perhaps mid-30s expected (revenue) growth," he said in a report. "Given its strong positioning and execution, there's no denying that Palantir is deserving of a premium valuation. However, valuation cannot and should not be irrelevant, and we find it exceedingly difficult to justify Palantir's multiple that in our view already discounts significant further acceleration and upside versus consensus expectations."
Also, Palantir forecast adjusted free cash flow in 2025 of $1.6 billion at the mid-point of guidance versus estimates of $1.28 billion.
At RBC Capital, analyst Rishi Jaluria maintains an under-perform rating based on valuation.
"We question how aggressive guidance has been set, especially considering lumpy government deals and a competitive environment for the commercial business," he said in a report. "Additionally, we think positive revisions were already priced into the stock ahead of earnings."
Heading into the fourth quarter earnings report, PLTR stock had gained 10% in 2025. Palantir stock surged 340% in 2024.
PLTR stock hit an all time intraday high of 85.22 on Jan. 31.
Meanwhile, Palantir's data analytics software has utilized with government customers for intelligence gathering, counterterrorism and military purposes. It's now targeting generative artificial intelligence applications in health care, energy and manufacturing. Palantir is among AI stocks to watch.
Palantir Stock: Solid Technical Ratings
Further, Palantir rolled out its "Artificial Intelligence Platform" in early 2023.
"(Chief Executive Alex) Karp & Co. are playing chess in the AI Arms race while others play checkers and the bears continue to miss this generational tech story as they cannot find AI in their spreadsheets," said Wedbush analyst Daniel Ives in a report.
Amid the rise of PLTR stock in the fourth quarter, stock based compensation reduced earnings and net income using generally accepted accounting principles, or GAAP.
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 B. 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.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
