TLDR
- Palantir stock has surged over 750% since 2024 and doubled in 2025, driven by AI platform adoption
- Company posted 39% revenue growth in Q1 with U.S. commercial segment growing 71%
- Stock trades at extreme 120x sales ratio, far above typical software company valuations
- Top investor Rick Orford maintains Strong Buy rating ahead of August 4th earnings
- Analyst consensus remains Hold with average price target implying 31% downside
Palantir shares continue their meteoric rise as investors weigh explosive growth against sky-high valuations. The data analytics company has delivered one of the market’s most dramatic performances, but the price tag now has some questioning whether the party can continue.
The stock has doubled so far in 2025. Since the start of 2024, shares have rocketed more than 750% higher. This puts Palantir among the biggest winners in the AI revolution.
Recent performance shows the company is executing well operationally. First quarter revenue jumped 39% year over year. Management guided for 38% growth in the second quarter.
The U.S. commercial division stands out as a particular bright spot. Revenue in this segment surged 71% in the first quarter alone.
Much of this growth stems from Palantir’s Artificial Intelligence Platform (AIP). The platform integrates large language models and AI agents into existing workflows. Companies are rushing to adopt AI solutions but often lack the technical expertise to build them internally.
Government Contracts Provide Stability
Palantir’s government business remains the foundation of its operations. The company has deep ties to the U.S. defense sector through multi-year, high-margin contracts. This provides steady revenue streams that help cushion any potential slowdown in commercial markets.
International commercial business represents the weakest part of current results. However, this could improve as AI adoption spreads more widely across Europe.
The company has a track record of beating its own guidance. Management tends to set conservative expectations, then delivers results that exceed those targets each quarter.
Valuation Concerns Mount
The stock’s price movements have far outpaced business growth. While revenue grew 39% in the first quarter, the stock price has increased over 750% since early 2024.
This disconnect shows up clearly in valuation metrics. Palantir now trades at nearly 120 times sales. Most software companies trade between 10 to 20 times sales. Even the most expensive typically max out around 30 times sales.
At current levels, Palantir is at least four times more expensive than peers. For the stock to reach a more reasonable 30 times sales, trailing revenue would need to hit $11.7 billion.
To achieve that target within three years, Palantir would need 56% compound annual growth. That’s well above the current pace of expansion.
This means three to four years of growth may already be priced into the stock. New investors face the challenge of buying at these elevated levels.
Top investor Rick Orford sees things differently. Ranked among the top 1% of stock pickers on TipRanks, he maintains a Strong Buy rating on the shares.
Orford expects another positive move following the August 4th earnings report. He points to the company’s track record of beating estimates and the growing demand for AI solutions.
“American enterprises are most likely desperate to implement AI solutions, but not all of them have the technical expertise to do so,” Orford explains. AIP provides these companies with ready-made AI capabilities.
The stock historically swings an average of 17.5% following earnings announcements. Orford believes this volatility will work in shareholders’ favor this time.
Analyst sentiment remains more cautious overall. The consensus rating sits at Hold based on 10 Hold ratings, 4 Buys, and 3 Sells. The average 12-month price target of $109.50 implies 31% downside from current levels.
Next week’s earnings report will provide investors with fresh data on whether fundamentals can support the current valuation. The company needs to demonstrate that business growth can eventually catch up to stock price appreciation.
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