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Palantir Technologies (PLTR) is poised to become this decade’s standout growth stock. While some admire its cutting-edge data analytics software, others dislike its complex business model and unconventional corporate culture.
However, nothing stands in the way of its explosive growth. What sets Palantir apart is its Artificial Intelligence Platform (AIP) that helps organizations (ranging from governments to corporations) make sense of massive amounts of data to make better, faster decisions.
Over the last few years, Palantir has combined strong revenue growth with disciplined cost control. Investors are increasingly taking notice of its shift from a government-heavy contractor to a scalable enterprise software player, a pivot that could unlock massive shareholder value.
The stock has returned a whopping 1,310% over the last three years. In fact, it is among the best-performing stocks this year, rising 82.4% year-to-date, wildly outperforming the overall market gain%. Let’s dig in and see if now is the time to buy this stock.
The Shift to Commercial Expansion Is Working in Its Favor
Palantir’s main software platforms include Gotham, which is used by defense and law enforcement agencies for counterterrorism, investigations, and operations. The Foundry platform is designed for commercial clients, allowing them to integrate data, create operational workflows, and deploy AI models at scale.
Palantir was long known as a government-focused company, particularly in defense and intelligence. And government contracts are still a key growth driver. In the most recent first quarter, total government revenue increased 45% year-on-year to $487 million, with U.S. government revenue contributing $373 million.
Management emphasized that Palantir’s delivery of the TITAN battlefield vehicle on time and within budget, an unprecedented achievement for a software-led defense prime, was hailed as a standout moment in the first quarter. The U.S. Army rated TITAN as a top-performing program, validating Palantir’s software-first approach to defense platforms. Additionally, Maven Smart System usage has doubled twice in less than a year, and NATO has adopted Maven as its C2 system. U.S. combatant commands are increasingly relying on Maven for intelligence automation, situational awareness, and battlefield decision-making, showing Palantir’s growing presence in allied defense infrastructure.
While government contracts are a major growth driver, they are also exposed to budget constraints. Hence, heavy reliance on government contracts has worried investors and analysts. This is probably why, despite Palantir’s rapid growth, some analysts remain bearish on the stock.
However, Palantir has been aggressively shifting toward the commercial sector, and this pivot is critical to the company’s growth potential. The company’s most notable achievement this quarter was exceeding a $1 billion annual run rate in its U.S. commercial business. The segment’s revenue increased 71% year over year and 19% sequentially. AIP is now driving both net new customer growth and deeper engagements with existing clients, with the customer base increasing 39% year-over-year to 769.
The company raised its full-year revenue guidance to a range of $3.89 billion to $3.902 billion, with adjusted free cash flow expected to be between $1.6 billion and $1.8 billion. U.S. commercial revenue is expected to exceed $1.178 billion, representing at least a 68% increase. Management reiterated its commitment to maintaining GAAP profitability in all quarters of 2025.
Palantir’s unique positioning in the software and artificial intelligence (AI) space, as well as its financial performance and trajectory, all point to the company becoming a breakout stock in the coming years. These expectations are reflected in its premium valuation. The stock currently has a high forward adjusted price-earnings multiple of 224x.
Risk-averse investors may need to wait for a more favorable entry point.
What Does Wall Street Say About Palantir Stock?
Overall, analysts still maintain a cautious stance on PLTR stock, rating it as a “Hold” due to its steep valuation. Among the 20 analysts covering the stock, three recommend a “Strong Buy,” 12 suggest holding, one says it is a “Moderate Sell,” and four have given it a “Strong Sell” rating. The stock’s impressive surge this year has led it to surpass its average target price of $104.94. However, the high price estimate of $155 suggests a rally of over 12% from current levels.
