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Data analytics firm Palantir (PLTR) has experienced a multi-day selloff in 2025, including a nearly 11% drop on Thursday, March 6.
However, one analyst has changed his opinion on the beaten-down stock, perhaps creating room for optimism in PLTR.
William Blair Upgrades Palantir
Upgrading the stock to “Market Perform” from “Underperform,” a William Blair analyst took a cautiously bullish tone stating, “We are upgrading our rating on shares of Palantir to Market Perform after the 33% DOGE-driven selloff from $125 to $84 over the past three weeks. While valuation is still frothy with potential downside risk of greater than 40% on government contract delays, there have been positive developments.”
Commenting further, the analyst said, “Its combination of revenue growth (31% guidance for 2025) and operating margin (45% for 2025) rank among the highest in all software. With the focus on growth, we did not fully appreciate Palantir’s operating leverage and ability to grow with minimal hiring. Palantir’s revenue from 2022 through 2024 grew 50% while headcount increased by only 3%.”
About Palantir Stock
Founded in 2003, Palantir develops data analytics software used by both government and commercial clients. Its primary products include Gotham, Apollo, and Foundry, which assist in integrating, visualizing, and analyzing large datasets.
Valued at a market capitalization of $188.7 billion, Palantir stock is up 8.5% on a YTD basis.
So, what could have been the possible reasons for the change in William Blair’s stance on Palantir? Let’s find out.
Palantir Delivers Strong Q4 Performance
Palantir delivered a strong performance in its latest quarterly results, surpassing expectations on both revenue and earnings. The company’s top line expanded by 36% year-over-year, reaching $828 million, driven largely by robust growth in its U.S. commercial and government segments. Revenue from U.S. commercial operations surged by 64% to $214 million, while government-related revenue climbed 45% from the prior year to $343 million.
Earnings saw an even more pronounced increase, rising 75% over the same period to $0.14 per share, significantly exceeding analyst projections of $0.11. This latest performance marks the sixth consecutive quarter in which Palantir has outpaced earnings expectations, underscoring the company’s ability to deliver consistent profitability.
Demand for Palantir’s offerings remained strong, as reflected in the total contract value for U.S. commercial deals, which soared by 134% year-over-year to $803 million. Additionally, the company experienced a 43% increase in its total customer base compared to the previous year, reinforcing its expanding market presence.
Overall, the company secured 129 contracts worth at least $1 million in Q4 2024, along with an additional 32 deals exceeding $10 million.
On the cash flow front, Palantir generated $1.2 billion in net cash from operating activities for the year ending Dec. 31, further strengthening its financial position. By the close of 2024, the company reported a cash balance of $2.1 billion with no short-term debt obligations, ensuring ample liquidity to support future growth initiatives.
Looking ahead, Palantir’s revenue outlook for 2025 stands between $3.741 billion and $3.757 billion, surpassing market expectations of $3.52 billion. This guidance signals continued momentum as the company capitalizes on increasing demand for its data analytics and AI-driven solutions.
Worth the Hype?
Palantir’s solid financials provide it with the base to embark upon its strategic initiatives with confidence.
And contrary to previous concerns, Palantir may stand to gain from the Department of Government Efficiency’s efforts to identify and reduce expenditures across federal agencies. This could translate into increased investments in Palantir’s AI platforms, particularly as recent shifts in the Department of Defense budget indicate a growing reliance on automation to enhance operational efficiency. Many of the budget reallocation priorities align with Palantir’s key focus areas, including border security, missile defense, drone operations, cybersecurity, military preparedness, and training.
From a valuation standpoint, Palantir’s stock remains richly priced, which may deter value-oriented investors. The company trades at a forward price-earnings (P/E) ratio of 288.7x, a price-sales (P/S) ratio of 73.8x, and a price-cash flow (P/CF) ratio of 976x — substantially above the sector averages. These elevated multiples suggest that prospective investors should carefully assess the risks before considering an entry at current levels.
Analyst Opinion
Considering all this, analysts have deemed the stock a “Hold” with a mean target price of $85.11. This indicates an upside potential of about 3% from current levels. Out of 19 analysts covering the stock, three have a “Strong Buy” rating, 11 have a “Hold” rating, one has a “Moderate Sell” rating and four have a “Strong Sell” rating.
