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Palantir Technologies (PLTR) has been the best-performing S&P 500 ($SPX) stock over the past year. Shares have skyrocketed about 480% over the past 52 weeks, and its meteoric rise continues. So far in 2025, Palantir has climbed 66%, signaling sustained investor confidence in its prospects led by solid demand for core offerings.
The company’s artificial intelligence capabilities have captured interest from both the public and private sectors, and that demand is translating into solid sales and margins. As more organizations adopt its Artificial Intelligence Platform (AIP), Palantir’s upward trajectory could sustain.
From Friday’s closing price of $129.52, Palantir would need to gain just under 17% to double its value in 2025. Given the current momentum and positive investor sentiment, that target doesn't seem far-fetched. A single strong quarterly earnings report could be the catalyst that pushes it past that milestone.
With AI adoption expanding and Palantir dominating the enterprise software space, the momentum in Palantir’s business will sustain.
What Could Drive Palantir Stock Higher?
Palantir is benefiting significantly from AI-led demand, and its first-quarter 2025 results have only strengthened the bullish narrative around the data analytics and AI company. In the first quarter of 2025, Palantir reported a 39% year-over-year revenue growth. Particularly notable was the surge in U.S. revenue, which jumped 55%, with U.S. commercial revenue leading the charge with a strong 71% increase. The U.S. government business also performed strongly, posting 45% growth.
Palantir’s ability to grow its customer base and deepen relationships with existing clients continues to pay off. Customer count climbed 39% from the prior year to 769, and revenue from Palantir’s top 20 customers reached $70 million on a trailing 12-month basis, a 26% jump. These figures highlight not just scale, but also increasing stickiness and value derived from Palantir’s solutions.
The key catalyst behind Palantir’s growth is its AIP, which is seeing massive traction in the U.S. commercial sector. U.S. commercial revenue exceeded a $1 billion annualized run rate. The company also closed $810 million in total contract value in this segment, and doubled the number of $1 million-plus deals compared to the same period last year.
It’s not just the top line that’s improving. Palantir also reported a significant boost in profitability, with adjusted operating margins rising to 44%, an 800 basis point expansion from a year ago. Net dollar retention increased to 124%, highlighting improved customer engagement.
Palantir ended Q1 with $5.97 billion in remaining deal value, up 45% year-over-year, and $1.9 billion in remaining performance obligations, up 46%. These metrics underscore strong forward visibility and a healthy sales pipeline, particularly in the commercial sector.
Reflecting the ongoing momentum in its business, Palantir raised its full-year 2025 revenue guidance midpoint to $3.896 billion, indicating 36% growth from 2024. U.S. commercial revenue is expected to exceed $1.178 billion, up 68%. The Q2 revenue outlook, guided between $934 million and $938 million, suggests continued sequential growth.
Valuation Is a Major Red Flag for PLTR Stock
Amid all the enthusiasm, Palantir’s valuation is a major red flag. PLTR stock trades at a price-sales ratio of 104.9x. Its forward price-earnings multiple is an eye-popping 346.3x. These numbers suggest that PLTR is highly overvalued, where even a modest stumble could spark outsized downside.
This concern is reflected in Wall Street’s outlook. Despite Palantir’s solid financials, analysts remain cautious and maintain a consensus “Hold” rating. The skepticism reflects doubts over whether such rapid growth can continue and whether current valuation levels are sustainable.
The Bottom Line
Palantir has delivered impressive results and built substantial momentum around its AI-driven solutions. The company’s ability to grow revenue, expand margins, and deepen client relationships is helping to justify investor enthusiasm, which can help it double in 2025. However, Palantir’s high valuation can’t be ignored, and it poses a significant risk.
