Palantir Technologies forecast for 2025: is growth justified, or are the shares overvalued?

Even though the market has priced in ambitious revenue expectations for Palantir shares – pushing the P/E ratio above 530 compared to a sector average of 42 – PLTR stock has continued its steady upward trend, reaching a new all-time high of 133 USD.

In Q1 of the 2025 financial year, Palantir Technologies Inc. (NASDAQ: PLTR) reported a year-on-year revenue increase of 39%, reaching 884 million USD. This growth was driven by a 71% surge in revenue from the US commercial market, which exceeded the annual equivalent of 1 billion USD for the first time. The company raised its full-year revenue guidance to a range of 3.89-3.90 billion USD, reflecting strong demand for its artificial intelligence platform (AIP) and government contracts.

The operating margin improved to 44%, which, combined with revenue growth, resulted in a Rule of 40 score of 83%, highlighting a strong balance between growth and profitability.

Despite these positive results, Palantir shares fell by over 11% in after-hours trading, a move attributed to elevated investor expectations and ongoing concerns about the company’s valuation. Analysts noted that while the figures were strong, the market had already priced in even more aggressive growth, prompting investor caution. However, the rally resumed the following day, and on 15 May, the stock reached a new all-time high of 133 USD.

This article examines Palantir Technologies Inc., outlines the company’s revenue streams, reviews its quarterly earnings reports, and provides a fundamental analysis of PLTR. It also presents expert forecasts for Palantir shares in 2025 and analyses PLTR’s stock performance as the basis for a 2025 outlook on Palantir Technologies Inc. shares.

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 under the PLTR ticker symbol on the New York Stock Exchange.

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 shows 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

• 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

• Revenue: 883.9 million USD (+39%)
• Net income: 214.0 million USD (+24%)
• Earnings per share: 0.08 USD (+100%)

Revenue by segment:

• Commercial Revenue: 396.8 million USD (+33%)
• Government Revenue: 486.9 million USD (+45%)
• U.S. Government Revenue: 373.0 million USD (+45%)
• U.S. Commercial Revenue: 255.0 million USD (+71%)

The Q1 2025 earnings report reflects Palantir’s continued growth and strengthening position in the AI solutions market. Revenue increased by 39% year-on-year and met analysts’ consensus forecasts, highlighting the company’s strong business momentum. A major driver of growth was the U.S. commercial segment, where revenue increased by 71%.

The quarterly data also indicate progress in diversifying revenue sources. Palantir continues to reduce its reliance on government contracts by increasing the share of commercial clients. Currently, the commercial segment accounts for approximately 40% of U.S. revenue. Its client base is also expanding, with the number of customers increasing by 39% year-on-year and by 8% compared to the previous quarter.

During the reporting period, Palantir closed 139 deals, each worth at least 1 million USD. Of these, 51 deals exceeded 5 million USD, and 31 were valued at over 10 million USD. These figures indicate a growing demand among large corporate clients for Palantir’s products.

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 revenue forecast for 2025 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.

Expert forecasts for Palantir Technologies Inc.’s stock

• Barchart: three out of 20 analysts rated Palantir Technologies stock as a Strong Buy, 12 as Hold, one gave a Sell recommendation, and four assigned a Strong Sell rating. The highest target price is 141 USD, while the lowest is 18 USD
• MarketBeat: five out of 23 analysts rated the stock as a Buy, 15 as Hold, and three as Sell. The highest target price is 141 USD, while the lowest is 18 USD
• TipRanks: three out of 18 analysts rated the stock as a Buy, 11 as Hold, and four as Sell. The highest target price is 150 USD, and the lowest is 40 USD
• Stock Analysis: three out of 20 experts rated the shares as a Strong Buy, one as a Buy, 11 as a Hold, three as Sell, and two as Strong Sell. The highest target price is 130 USD, and the lowest is 20 USD

Palantir Technologies Inc. stock price forecast for 2025

Palantir shares are trading within an ascending channel. In April 2025, PLTR prices rebounded off the trendline, which acted as support, and surged upwards, breaking through an all-time high of 125 USD. Based on the current performance of Palantir Technologies shares, the potential price movements in 2025 are as follows:

The optimistic forecast for Palantir stock anticipates a breakout above resistance at 133 USD, followed by a rise towards the upper boundary of the channel at 150 USD. Subsequently, PLTR prices may undergo a corrective decline, with the first target expected around the 133 USD level.

The negative forecast for Palantir shares indicates a potential breakdown below the support level at 120 USD. In this scenario, PLTR’s share price could retreat to the trendline near 95 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 (approximately 55% in 2024) 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 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
• Economic and market conditions: a potential US recession (with some analysts estimating a 45% likelihood by the end of 2025) could reduce corporate spending on high-cost software like Palantir’s. The average annual revenue per commercial client in the US is 2.23 million USD. Rising Treasury yields or tighter financial conditions may also weigh on growth stocks, indirectly affecting Palantir’s ability to secure new deals
• 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 amounts of their shares, with Thiel selling a third of his stake in the company 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 actions may adversely affect the market stock price 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.