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Wall Street’s favorite artificial intelligence (AI) stock, Palantir Technologies (PLTR), has been caught in a storm of volatility this year, facing sharp swings amid market uncertainty. After a red-hot rally in 2024, fueled by soaring demand for its AI-powered data analytics software, the stock has hit a rough patch this year. Over the past month alone, PLTR shares have crashed more than 23% as valuation concerns and economic uncertainty shake investor confidence.
To make matters worse, the company’s heavy dependence on government contracts has left it especially vulnerable to federal budget cuts. With both the Department of Defense (DoD) and the Department of Government Efficiency (DOGE) pushing for spending reductions, fears of shrinking defense allocations have spooked investors. Yet, just when investors were starting to lose faith, Palantir came roaring back into the spotlight.
At the Artificial Intelligence Platform (AIP) Conference held on March 13, the company unveiled a string of new defense-focused partnerships aimed at making American manufacturing more efficient and strengthening national security. This upbeat announcement triggered a strong rebound in the stock, giving investors a reason to believe in the company's long-term growth story once again. So, with these new defense deals in the pipeline and its AI platform continuing to gain traction, can PLTR’s recent downfall be the perfect entry point investors have been waiting for?
About Palantir Stock
Founded in 2003, Denver-based Palantir Technologies (PLTR) has grown into a tech powerhouse, trusted by governments, militaries, and global enterprises for its cutting-edge intelligence analysis and operational planning solutions. Driving its success is the Artificial Intelligence Platform (AIP), a powerful system that integrates generative AI into business operations, enabling organizations to streamline decision-making and enhance efficiency.
With a market capitalization of around $196.8 billion, shares of this data analytics company have tanked nearly 31% from their 52-week peak of $125.41 achieved in February 2025, as market volatility and budget cut fears weighed on the stock. Yet, despite this pullback, Palantir’s meteoric rise is hard to ignore. The stock is still up a remarkable 261% over the past year, dwarfing the broader S&P 500 Index’s ($SPX) return during the same stretch.
Even after the sharp pullback from its February highs, Palantir is still richly valued, trading at a staggering 268.3 times forward earnings and 71.49 times sales, well above its sector and five-year averages. While these lofty valuations may raise concerns, they also signal the market’s bold bet on Palantir’s future.
Palantir Surpasses on Q4 Earnings
Palantir started February on a bullish note, delivering a knockout fourth-quarter earnings report that sent its stock soaring over 23% in the subsequent trading session. The AI software leader reported a 36% year-over-year revenue surge to $828 million, beating analyst projections by about 6.7%. Even more impressive, its adjusted EPS skyrocketed 75% annually to $0.14, blowing past Wall Street estimates with a notable 23.7% beat.
The company’s success in the final quarter of fiscal 2024 was largely driven by a 52% year-over-year increase in U.S. revenue, reaching $558 million. The U.S. commercial segment stole the show, with revenue soaring 64% annually to $214 million, while its government business delivered a solid 45% revenue jump to $343 million.
Proving its contract-winning prowess, Palantir closed 129 deals worth at least $1 million, 58 contracts over $5 million, and 32 exceeding $10 million, cementing its growing dominance across both commercial and government sectors. Backed by a rock-solid balance sheet of approximately $5.2 billion in cash, cash equivalents, and short-term U.S. Treasury securities, Palantir remains well-equipped to drive fuel innovation, capitalize on new opportunities, and navigate market turbulence with confidence.
Looking ahead to fiscal 2025, management expects revenue to range between $3.741 billion and $3.757 billion, while U.S. commercial revenue is expected to be over $1.079 billion, representing a growth rate of at least 54%. On the profitability front, the company anticipates adjusted operating income of $1.551 billion to $1.567 billion. Furthermore, Palantir also expects to achieve GAAP operating income and net income every quarter this year, showcasing its solid financial momentum.
Palantir Soars on New Defense-Focused Deals
Palantir rode the wave of investor optimism following its AIPCon event on March 13, sending its stock up by more than 8% in the next trading session. The AI-driven data analytics firm announced several new customer wins for its “Warp Speed” operating system, a manufacturing platform designed to adapt to businesses' needs and enhance efficiency through AI-powered insights.
In December, Palantir launched its first Warp Speed cohort, bringing together a lineup of industry heavyweights committed to revitalizing U.S. production through advanced technology. The inaugural members included Anduril Industries, L3Harris Technologies (LHX), Panasonic Energy of North America, and ShieldAI, all aiming to boost American manufacturing output through AI-driven operational efficiency.
At AIPCon 2025, Palantir revealed it had added six new defense tech customers to its Warp Speed program, including Epirus, Red Cat (RCAT), Saildrone, Saronic, SNC, and Ursa Major. The new partnerships reflect Palantir’s growing presence in the defense sector as the company continues to expand its influence in America’s industrial base by helping clients develop faster, safer, and more efficient production processes for critical technologies, from sea vessels to drones and propulsion systems.
What Do Analysts Expect for Palantir Stock?
While Palantir’s new deals fired up investor enthusiasm, Wall Street still remains wary of the stock, sticking to a cautious “Hold” rating overall. Of the 19 analysts offering recommendations, three advise a “Strong Buy,” 11 suggest a “Hold,” one gives a “Moderate Sell,” and the remaining four maintain a “Strong Sell.”
Although the stock is trading at a premium to its average analyst price target of $84.22, the Street-high target of $125 signals that PLTR can still climb as much as 45% from current levels.
