TLDR:
- Palantir stock rose 4.6% following news of NATO adopting its Maven Smart System AI platform
- Wedbush analyst Daniel Ives maintained an Outperform rating with a $120 price target (29.6% upside)
- PLTR has surged 332% in the past year, driven by AI adoption and expected defense spending increases
- First quarter earnings will be reported on May 5, with analysts expecting EPS of $0.13 (up 63%) and revenue of $863.8 million (up 27%)
- Wall Street remains cautious with a Hold consensus rating and average price target of $95.25
Palantir Technologies (PLTR) saw its stock price jump 4.6% in Monday’s trading session, reaching as high as 9.9% gains earlier in the day. The rally came after NATO signed on to use the company’s Maven Smart System AI platform for military applications.
The stock move outpaced broader market gains, with the S&P 500 and Nasdaq Composite rising just 0.7% and 0.6% respectively on Monday. The market benefited from news that electronics would be temporarily exempt from the Trump administration’s reciprocal tariffs.
Following the NATO deal announcement, Wedbush analyst Daniel Ives reaffirmed his Outperform rating on Palantir stock. His price target of $120 suggests nearly 30% upside from current levels.
Palantir’s stock performance has been stellar over the past year, with shares climbing 332%. This surge comes as investors bet on the company benefiting from increased defense spending under President Trump and growing adoption of its AI tools by commercial clients.
Government Contracts Driving Growth
The NATO contract represents a major win for Palantir and its CEO Alex Karp. The deal highlights the increasing interest from government agencies in leveraging AI technology to enhance military capabilities.
Ives noted that earlier concerns about reduced defense spending had weighed on Palantir’s stock. However, he believes the company’s specialized software gives it an edge, particularly for handling sensitive and secure data.
Both U.S. and European governments are prioritizing AI initiatives and increasing technology spending in this area. This trend positions Palantir to secure additional contracts as these plans expand.
The company’s dual strength in both government and business markets has led Wedbush to view Palantir as “one of the top names to own in 2025.”
Upcoming Earnings and Expectations
Investors won’t have to wait long to see if this optimism is justified. Palantir will release its first quarter 2025 results on May 5, after market close.
Wall Street expects strong performance with earnings per share projected at $0.13, representing a 63% increase from the same period last year. Revenue is forecast to reach $863.8 million, up 27% year-over-year.
These projections reflect continued momentum in both the government and commercial sectors. The recent NATO contract could help support this positive outlook for the remainder of 2025.
Valuation Considerations
Despite the positive news and strong performance, Palantir’s current valuation raises questions for some investors. The stock trades at approximately 166 times this year’s expected earnings and 57 times expected sales.
These multiples are elevated even when compared to other high-growth software companies. For investors with low risk tolerance or sensitivity to volatility, these valuation levels might be a reason for caution.
Year-to-date, Palantir stock has climbed roughly 22.5% despite broader market volatility in 2025. This performance has pushed the company’s valuation metrics even higher.
The high valuation hasn’t deterred some analysts who believe in the company’s long-term growth potential. They point to Palantir’s strong margins and substantial runway for expansion as reasons to remain bullish.
Wall Street’s Mixed Outlook
Despite Wedbush’s optimism, the broader Wall Street community remains divided on Palantir’s prospects. According to TipRanks data, PLTR currently has a Hold consensus rating.
This rating is based on four Buy recommendations, eleven Hold ratings, and three Sell ratings from analysts covering the stock. The average price target of $95.25 implies just 2.84% upside from current levels.
This cautious stance may reflect concerns about the stock’s valuation after its massive run-up over the past year. However, strong government deals like the NATO contract and growing AI demand could shift sentiment if growth continues to exceed expectations.
Palantir’s upcoming earnings report on May 5 will be closely watched for signs that the company can maintain its growth trajectory and justify its premium valuation.
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