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After surging more than 300% in 2024, Palantir (PLTR) stock has recently been quite volatile. Valued at a market capitalization of $280 billion, PLTR stock trades just 8% below its all-time highs, as investors remain concerned over its lofty multiples.
From May 5 through May 8, Cathie Wood’s Ark Invest sold Palantir shares worth nearly $97 million, with the company reporting its first-quarter results after market close on May 5. Despite the sales, Palantir remains Ark’s third-largest holding, with Wood’s funds holding more than $560 million worth of shares.
How Did Palantir Perform in Q1 2025?
Palantir Technologies delivered impressive first-quarter results, exceeding revenue expectations while meeting earnings forecasts. Despite the strong performance, PLTR stock fell over 12% on Tuesday.
The AI software company reported revenue of $884 million in Q1, up 39% year-over-year and surpassing analyst estimates of $863 million. Adjusted earnings per share of $0.13 were in line with consensus estimates, while GAAP (generally accepted accounting principles) earnings came in at $0.08 per share, with net income of $214 million.
Palantir’s growth was driven by steady expansion in its U.S. operations. U.S. commercial revenue surged 71% year-over-year to $255 million, exceeding $1 billion in annual run rate for the first time. Meanwhile, U.S. government revenue grew 45% to $373 million, highlighting increasing adoption of Palantir’s AI capabilities across defense and federal agencies.
During the earnings call, CEO Alex Karp emphasized the company’s position at the forefront of AI implementation, describing a “tectonic shift” in the adoption of Palantir's software. CTO Shyam Sankar highlighted that while competitors focus on AI supply (the models themselves), Palantir has concentrated on AI demand, delivering practical applications through its AIP.
Palantir’s AIP – its Artificial Intelligence Platform – continues to drive customer momentum. CFO Dave Glazer noted Palantir closed $810 million in U.S. commercial contract value during the quarter, indicating a growth of 183% year-over-year. Overall, Palantir closed 139 deals worth at least $1 million, including 51 exceeding $5 million and 31 surpassing $10 million.
What’s Next for PLTR Stock?
Based on the strong performance, Palantir raised its full-year 2025 guidance significantly. At the midpoint estimate, Palantir forecasts 2025 sales at $3.895 billion, up from an earlier forecast of $3.75 billion. U.S. commercial revenue is projected to exceed $1.178 billion, growing at least 68% year-over-year. Palantir also increased its profitability outlook, forecasting adjusted operating income of $1.71 billion and free cash flow of $1.7 billion.
PLTR stock has stood out in 2025, rising 53% year-to-date amid broader tech sector weakness, making it the S&P 500 Index’s ($SPX) top performer. This growth reflects investor confidence in Palantir’s defense contracts and its potential role in Trump’s government efficiency initiatives.
However, this astonishing bull run has meant that PLTR stock trades at a forward adjusted price-earnings multiple of 203x. Three years ago, the stock was trading at a forward P/E multiple of just 34x.
Analysts expect Palantir stock to report adjusted earnings per share of $2.04 in 2029, up from $0.41 per share in 2024. If the tech stock trades at 75x forward earnings, it will be priced around $150 in early 2029, above the current trading price of $120, indicating 25% growth over the next four years.
Out of the 20 analysts tracking PLTR stock, three recommend “Strong Buy,” 12 recommend “Hold,” one recommends “Moderate Sell,” and four recommend “Strong Sell.” The average target price for the tech stock is $91, indicating potential downside of over 20% from current levels.
