Palantir surprises again with its results – and once more raises alarm over its valuation

Despite another strong quarter, debate is intensifying over Palantir’s share price, which many consider excessively high.

Palantir Technologies Inc. (NASDAQ: PLTR) delivered a strong set of results for Q2 2025, reporting revenue of 1.00 bn USD, up 48% year-on-year and above market expectations of around 0.94 bn USD. Growth was particularly pronounced in the US, where revenue reached 733 million USD (+68% y/y), while the US Commercial segment surged to 306 million USD (+93% y/y). On a GAAP basis, the company reported an operating margin of 27% and earnings per share of 0.13 USD (non-GAAP: 0.16 USD). On a non-GAAP basis, Palantir reported adjusted operating income of 464 million USD with a margin of 46%.

The results exceeded expectations and were accompanied by upgraded forecasts: management now anticipates Q3 revenue in the range of 1.083–1.087 billion USD and full-year 2025 revenue of 4.142–4.150 billion USD, while the US Commercial segment is expected to surpass 1.302 billion USD.

The market reaction to Palantir’s report unfolded in two phases. Immediately after the release, which beat expectations and included an upgraded outlook, the shares gained about 8% and set fresh all-time highs. Additional support came from revised target levels by investment banks: Bank of America raised its price target to 180 USD, while Morgan Stanley raised its forecast to 155 USD. Against this backdrop, the stock reached an intraday peak of around 190 USD on 12 August. However, investor enthusiasm soon faded: media discussion about overvaluation intensified, and short-sellers, including Citron Research, voiced criticism. Between 13 and 20 August, PLTR fell by 25%, effectively wiping out the post-earnings gains.

This article examines Palantir Technologies Inc., outlining the sources of its revenue, reviewing its quarterly results, and providing a fundamental analysis of PLTR. It also presents expert forecasts for Palantir’s shares in 2025 and analyses their recent performance as the basis for a forward-looking forecast of Palantir Technologies Inc.’s share price in 2025.

About Palantir Technologies Inc.

Palantir Technologies was founded in 2003 by Peter Thiel, Alexander Karp, Joseph Lonsdale, Stephen Cohen, and Nathan Gеttings. The company went public on 30 September 2020 on the New York Stock Exchange under the PLTR ticker symbol.

Palantir specialises in developing software for big data analysis, including Gotham, designed for national security and intelligence agencies; Foundry, for the corporate sector; and Apollo, for deploying software releases. These products are available to both government and private clients, providing software solutions for data management and analysis, emphasising privacy and security.

Palantir Technologies Inc.’s main financial flows

Palantir’s revenue primarily comes from the sale of licences for its software products and the provision of related services. The main revenue streams are listed below:

• Licence fees: companies and government agencies purchase licences to use Palantir platforms (Gotham, Foundry)
• Subscriptions and services: in addition to initial licences, Palantir offers subscriptions for technical support and upgrades and services for program implementation, customisation, and personnel training
• Professional services: provision of highly qualified services such as data analysis, development of tailored solutions, and assistance with system integration
• Government contracts: a significant share of revenue is derived from agreements with government agencies, which use the purchased technologies for data analysis in security, intelligence, and other governmental domains
• Corporate sector: in recent years, the company has been actively expanding its presence in the commercial market, where it offers its analytical solutions to large corporations to optimise their business processes, manage risks, and process statistical data

As a result, Palantir’s total revenue is generated through a combination of licensed software sales, subscriptions, professional services, and long-term contracts with government and private clients.

Palantir Technologies Inc. Q3 2024 report

Palantir Technologies released its Q3 2024 data on 4 November 2024. The key report highlights are outlined below:

• Revenue: 726.5 million USD (+30%)
• Net income: 149.3 million USD (+103%)
• Earnings per share: 0.06 USD (+100%)

Revenue by segment and region:

• US: 498.9 million USD (+45%)
• UK: 69.5 million USD (+10%)
• Other countries: 157.0 million USD (+21%)
• Government: 408.3 million USD (+33%)
• Commercial revenue: 317.5 million USD (+27%)
• US government revenue: 319.8 million USD (+39%)
• US commercial Revenue: 179.1 million USD (+34%)

The report indicates that the US government remains Palantir Technologies’ primary source of revenue, contributing nearly half of the company’s total revenue. Palantir forecasted revenue of 767.0-771.0 million USD in Q4 2024, representing a 5-6% increase compared to the previous quarter.

Palantir Technologies Inc. Q4 2024 report

Palantir Technologies released its Q4 2024 results on 3 February 2025. The key report highlights are as follows:

• Revenue: 827.5 million USD (+36%)
• Net income: 76.9 million USD (-21%)
• Earnings per share: 0.03 USD (-25%)

Revenue by segment:

• Commercial revenue: 372.5 million USD (+31%)
• US government revenue: 343.0 million USD (+45%)
• US commercial revenue: 214.0 million USD (+64%)

Palantir’s CEO, Alexander Karp, noted that the Q4 results continued to impress, emphasising that the company’s early assumptions about the widespread adoption and accessibility of large language models had proven correct and contributed to substantial growth. He also described the results as part of a long-term vision, stating that Palantir is in the early stages of a multi-year revolution for which the company has been preparing for over two decades.

For 2025, Palantir issued an optimistic forecast, expecting revenue in the range of 3.74-3.76 billion USD, equivalent to a year-on-year growth of approximately 31%. This guidance significantly exceeded analysts’ consensus estimates, reflecting confidence in the steady demand for the company’s AI platforms and software.

US commercial revenue was projected to reach 1.07 billion USD, representing a 54% increase compared with 2024. In addition, management forecast adjusted operating profit in the range of 1.55-1.57 billion USD and adjusted free cash flow of 1.05-1.70 billion USD. They also forecast to maintain both GAAP operating profit and net income in each quarter of 2025.

For Q1 2025, revenue projected revenue in the range of 858- 862 million USD, with adjusted operating profit between 354 and 358 million USD, setting new targets for the year ahead.

Despite Palantir’s positive outlook, recent reports of potential cuts to the US defence budget have raised concerns among investors, as over 40% of Palantir’s Q4 revenue came from US government contracts.

Palantir Technologies Inc. Q1 2025 report

On 5 May 2025, Palantir Technologies published its financial results for Q1 2025, covering the quarter ended 31 March. The key figures are as follows:

• Revenue: 883.9 million USD (+39%)
• Net income: 214.0 million USD (+24%)
• Earnings per share (non-GAAP): 0.13 USD (+62%)

Revenue by segment:

• Commercial revenue: 396.8 million USD (+33%)
• Government revenue: 486.9 million USD (+45%)
• US government revenue: 373.0 million USD (+45%)
• US commercial revenue: 255.0 million USD (+71%)

The Q1 2025 earnings report reflected Palantir’s continued growth and strengthened position in the AI solutions market. Revenue rose 39% year-on-year and was in line with analysts’ consensus forecasts, underlining the company’s strong business momentum. A major driver of growth was the US commercial segment, where revenue increased by 71%.

The quarterly data pointed to progress in diversifying revenue streams. Palantir continues to reduce its reliance on government contracts by increasing the share of commercial clients. The client base is also expanding, with the number of customers up 39% year-on-year and 8% quarter-on-quarter.

During the reporting period, Palantir closed 139 deals, each worth at least 1 million USD, including 51 above 5 million USD, and 31 exceeding 10 million USD. These figures underscore the rising demand for Palantir’s products among large corporate clients.

Profitability indicators were also impressive. Operating income totalled 176 million USD, with a 20% margin, and free cash flow amounted to 370 million USD. The Rule of 40, which is the sum of revenue growth and operating margin, stood at 83%, demonstrating a healthy balance between growth and efficiency.

Palantir maintains a confident outlook. Its full-year 2025 revenue forecast has been raised to a range of 3.89-3.90 billion USD, reflecting expectations of continued strong performance driven by its AIP platform and expanding partnerships in the commercial sector. The Q2 2025 forecast includes revenue in the range of 934-938 million USD and operating income of 401-405 million USD.

Despite the positive earnings report, Palantir’s shares fell by 11% following publication due to concerns about high valuation multiples – specifically, a P/E ratio of 536 compared with the software industry average of 42. However, PLTR’s share price rebounded the following day, suggesting that investors remain willing to accept risk in anticipation of outstanding results from Palantir Technologies.

Palantir Technologies Inc. Q2 2025 Results

On 4 August 2025, Palantir Technologies published its Q2 2025 financial results for the quarter ending 30 June. Key highlights are as follows:

• Revenue: 1.00 billion USD (+48%)
• Net income: 326.72 million USD (+33%)
• Earnings per share (non-GAAP): 0.16 USD (+100%)

Revenue by segment:

• Commercial revenue: 450.7 million USD (+47%)
• Government revenue: 552.9 million USD (+49%)
• US government revenue: 426.1 million USD (+53%)
• US commercial revenue: 306.5 million USD (+93%)

Palantir demonstrated strong growth in Q2 2025. Revenue reached 1.00 billion USD, up 48% year-on-year and 14% quarter-on-quarter. Growth was driven primarily by two segments: the Government segment contributed 553 million USD (+49% y/y), while the Commercial business generated 451 million USD (+47% y/y). Geographically, the US was the main driver with revenue of 733 million USD (+68% y/y and +17% q/q). Outside the US, revenue totalled 271 million USD (+12% y/y). The business exhibits seasonal patterns, with the second half of the year typically stronger due to the timing of US government procurement.

Profitability improved in Q2. The gross margin stood at approximately 80.8% – representing the portion of revenue retained after direct product servicing costs. GAAP operating margin reached 27%, while net margin was 32.6%, reflecting substantial net profit relative to revenue. On a non-GAAP basis, which excludes certain non-operational items, the operating margin was 46%. Margin expansion was supported by operational leverage, with expenses growing more slowly than revenue.

Earnings per share were 0.13 USD on a GAAP basis and 0.16 USD on a non-GAAP basis. The difference is attributable to stock-based compensation and related employer taxes.

Management raised guidance for Q3 2025, expecting revenue of 1.083–1.087 billion USD and adjusted operating income of 493–497 million USD. For the full year 2025, the company forecasts revenue of 4.142–4.150 billion USD (around +45% y/y), adjusted operating income of 1.912–1.920 billion USD, and adjusted free cash flow of 1.8–2.0 billion USD. The company also highlighted the acceleration of the US commercial segment, which is projected to exceed 1.302 billion USD over the year.

Fundamental analysis of Palantir Technologies Inc.

Below is a fundamental analysis of PLTR following the Q2 2025 results:

• Liquidity and balance sheet: Palantir holds approximately 6.0 billion USD in cash and US Treasuries, with no debt. Current assets total 6.89 billion USD, while current liabilities are 1.09 billion USD, giving a current ratio of around 6.3 and a cash ratio (cash + Treasuries to current liabilities) of about 5.5. This represents high liquidity and a substantial margin of safety
• Profitability and revenue quality: gross margin was 80.8%, GAAP operating margin 27%, and GAAP net margin 32.6% for the quarter. On a non-GAAP basis, adjusted operating margin was 46%. The difference between GAAP and non-GAAP primarily reflects stock-based compensation (SBC) of 160 million USD and employer taxes on SBC of 35 million USD. Interest income from Treasuries contributed significantly to the quarter, adding 56 million USD and supporting net profit
• Cash flows: operating cash flow was 539 million USD for the quarter, with adjusted free cash flow of 569 million USD. Capital expenditures remained low at approximately 8 million USD. For the full year, management expects adjusted free cash flow of 1.8–2.0 billion USD
• Conclusion on fundamental analysis: Palantir is a stable and profitable company with a strong balance sheet and robust cash flows. It has no debt, a substantial cash reserve, strong margins and cash generation, and a growing contract base with high retention. These factors reduce the likelihood of financial stress even during market slowdowns

However, with a share price of around 157 USD, the market valuation is extremely high. It already factors in expectations of rapid growth over many years without setbacks. This makes investing in Palantir at the current price highly risky, particularly if growth slows or external challenges arise. Purchasing shares now is justified only if there is confidence in the long-term success of the AIP platform and continued business expansion in both the US and internationally.

Expert forecasts for Palantir Technologies Inc.’s stock

• Barchart: 4 of 22 analysts rated Palantir Technologies shares as Strong Buy, 15 as Hold, 1 as Sell, and 2 as Strong Sell. The upper forecast target is 200 USD, while the lower target is 45 USD
• MarketBeat: 4 of 22 analysts rated the shares as Buy, 16 as Hold, and 2 as Sell. The upper forecast target is 200 USD, while the lower target is 45 USD
• TipRanks: 4 of 19 surveyed analysts rated the shares as Buy, 13 as Hold, and 2 as Sell. The upper forecast target is 200 USD, while the lower target is 45 USD
• Stock Analysis: 3 of 21 analysts rated the shares as Strong Buy rating, 2 as Buy, 13 as Hold, and 3 as Sell. The upper forecast target is 200 USD, while the lower target is 45 USD

Palantir Technologies Inc. stock price forecast for 2025

On the daily chart, Palantir shares remain within an ascending channel. The release of a strong quarterly report triggered a breakout above the upper boundary, accelerating gains: the share price rose 18% over six trading sessions to reach a local high of around 190 USD. Subsequently, investors began taking profits, leading to a correction and a return of shares within the channel. Based on the current dynamics, the price outlook for Palantir Technologies in 2025 is as follows:

The base case forecast for Palantir Technologies shares anticipates a further decline in PLTR towards the nearest support level at approximately 133 USD. At this level, investing in the shares may appear more attractive to investors, potentially stimulating buying interest. A rebound from support is then expected, followed by a resumption of price growth towards the upper boundary of the ascending channel at 180 USD.

The optimistic forecast for Palantir Technologies stock assumes a breakout above resistance at 160 USD, which could trigger another wave of share price growth, ultimately pushing PLTR back to resistance at 190 USD.

Risks of investing in Palantir Technologies Inc. stock

Investing in Palantir’s stock in 2025 involves certain risks that may impact the company’s earnings. Below are potential risks and factors that could negatively affect its revenue:

• Pressure from high valuation: Palantir stock is trading at elevated multiples as of February 2025, with, for example, a price-to-sales (P/S)) ratio exceeding 82 against expected revenue and a price-to-earnings (P/E) ratio above 140 against expected earnings. If the company fails to deliver sufficient growth to justify these valuations, investor sentiment may deteriorate, potentially leading to a sharp decline in its stock price. A correction is possible if revenue growth falls short of the projected 25-30% per year
• Reliance on government contracts: a sizeable portion of Palantir’s revenue comes from government clients, particularly US defence and intelligence agencies. Reductions in federal budgets, policy shifts under a new administration, or the non-renewal of key contracts could substantially impact revenue. Political instability or cuts in defence spending would heighten this risk
• Commercial sector challenges: although Palantir’s Commercial revenue is growing, it still constitutes a smaller share of total revenue. The company struggles to scale due to elevated costs, making it less attractive to small and medium-sized enterprises. If the Commercial sector growth slows or fails to offset potential declines in its government revenue, overall revenue may suffer
• Rising competition: Palantir faces competition from tech giants like Microsoft (NASDAQ: MSFT), which may integrate AI and analytics into broader offerings, and from specialised companies. If competitors offer cheaper or more affordable alternative solutions, Palantir risks losing its market share (especially in the commercial sector), which would negatively impact the company’s financial position
• Regulatory and AI risks: tighter regulation of AI and data analytics, especially in the US and globally, could limit Palantir’s capabilities or increase compliance costs. Concerns over privacy or misuse of its tools (for example, in surveillance) could damage the company’s reputation, deterring clients and reducing revenue
• Share capital dilution due to stock compensation: Palantir actively uses company shares for compensation, reducing their value for shareholders. If this practice continues without corresponding revenue growth, it could undermine investor confidence and put pressure on the stock price, raising doubts about the stability of future revenue
• Stock sales by insiders: in 2024, the company’s insiders, including CEO Alex Karp and co-founder Peter Thiel, actively sold significant portions of their personal holdings, with Thiel divesting a third of his stake during this period. In February 2025, it was announced that Karp had applied to sell an additional 1.00 billion worth of shares. Such insider activity may negatively impact the market price of the shares and investor sentiment

All these factors reduce confidence in Palantir’s ability to maintain its projected growth trajectory and revenue streams in 2025, making investment in its stock highly risky.

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