Can Palantir Stock Beat Earnings Expectations? Top Investor Weighs In

TLDR

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Palantir Technologies reports Q2 2025 earnings today with Wall Street expecting $939 million in revenue, representing 39% year-over-year growth
The company recently secured a massive 10-year contract with the U.S. Army worth up to $10 billion, establishing it as a key Defense Department contractor
Stock trades at 81 times forward sales versus 6.3 for Nasdaq 100, with analysts’ average price target of $116 below current $154 share price
Palantir has beaten revenue expectations in all but one quarter since going public, but stock reactions have been negative in nine of 19 earnings reports
Top investor Noah’s Arc downgrades from strong buy to hold, citing “peak euphoria” and extreme valuation despite expecting strong Q2 results

Palantir Technologies faces another high-pressure earnings report today as Wall Street braces for what could be a make-or-break quarter. The data analytics company has become something of a market darling, but that popularity comes with a hefty price tag.

Analysts expect the company to report $939 million in second-quarter revenue. That would mark a 39% jump from the same period last year, keeping pace with Palantir’s rapid growth trajectory.

The earnings come at a time when retail investors own roughly 45% of all shares. This heavy retail ownership has created what some observers call a “potent recipe for exuberance.”

Free cash flow is projected to hit $330 million for the quarter. Operating income expectations sit even higher at $404 million, according to analysts tracked by FactSet.

Defense Contracts Drive Growth

Palantir’s government business got a major boost last week with news of a new Army contract. The deal extends up to 10 years with a potential value of $10 billion, consolidating multiple existing contracts into one service agreement.

This contract establishes Palantir as one of the most important contractors to the U.S. Department of Defense. The company also recently served as lead contractor on the TITAN project, a mobile AI data analytics unit for field deployment.

The TITAN project marks a shift in military procurement. For the first time, a software company rather than traditional defense contractors took the lead role on such a project.

Palantir’s U.S. revenue grew 38% in 2024, while UK sales rose 29%. The rest of the world presents more challenges, with international sales up just 8% last year.

Government and commercial segments grow at similar rates. The government segment remains slightly larger in terms of overall revenue contribution.

Valuation Concerns Mount

The stock closed Friday at $154.27, creating controversy around its valuation metrics. Palantir trades at 81 times forward sales compared to 6.3 times for the Nasdaq 100 index.

Wall Street analysts maintain an average price target of $116. That suggests potential downside of nearly 30% from current levels, with individual targets ranging from $40 to $178.

Trading Volatility Expected

Palantir earnings typically bring wild stock swings. The company has reported 19 quarterly results since going public, beating revenue expectations in all but one quarter.

Despite this strong track record, stock reactions have been negative in nine of those 19 quarters. The average stock move on the day after earnings, whether up or down, has been 16%.

One prominent investor known as Noah’s Arc Capital Management expects strong Q2 results but warns about valuation risks. The top-rated investor recently downgraded shares from strong buy to hold, citing “peak euphoria” in the stock.

Noah’s Arc notes that Palantir might need 40% annual growth for four years just to justify current pricing levels. The investor calls this quarter potentially “super successful” while warning that even blowout results might not drive shares higher.

The company’s guidance for Q2 sits in the $934 to $938 million range. Meeting or beating these numbers would represent the 18th time in 19 quarters that Palantir has met or exceeded revenue expectations since its public debut.

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