Palantir's Q1 Earnings Surge Amid AI Boom, Raising Full-Year Outlook

Palantir shakes off defence spending concerns with boost to revenue outlook

Data intelligence group Palantir shook off concerns that US defence spending cuts could harm its sales of military software to the federal government, boosting its 2025 outlook after reporting forecast-beating results. The Denver, Colorado-based company lifted its revenue growth guidance for the year to 36 per cent, surpassing Wall Street's expectation for a 31 per cent increase, and boosted its outlook for several other financial metrics. This followed a first quarter in which the group reported a 39 per cent year-on-year jump in revenues to $884mn, while net income more than doubled from 12 months ago to $214mn. Chief executive Alex Karp described the revenue growth in the first three months of the year as "ferocious" and claimed it was "unparalleled" for a company of Palantir's size. "We believe our results are indicative of a revolution sweeping across our business and industry," he said, citing the rapid adoption of large language models by industry and governments," Karp said on Monday in his quarterly letter to shareholders. Launched in 2003 by technology entrepreneurs including Peter Thiel, its chair, and Karp, Palantir supplies software to governments, militaries and companies for collating, analysing and producing intelligence from large data sets. The US government is its largest customer, but Palantir's commercial unit has been growing rapidly, particularly since it launched its new "Artificial Intelligence Platform" in April 2023. Palantir's share price has surged from less than $30 per share in mid-2023 to near-record highs above $120 thanks to strong demand for its AI-powered software. Its shares were down more than 8 per cent in after-hours trading on Monday, having closed on May 2 at $124.28, a level that was their second-highest on record and valued the group at almost $300bn. Concerns about US defence spending cuts have weighed on the company, though, and spurred share price fluctuations this year. Defense secretary Pete Hegseth said in April he would cut more than $5bn in "non-essential" contracts, but the Trump administration has also proposed increasing the Pentagon's budget by 13 per cent in 2026 to spend more on areas like AI. Palantir said on Monday that revenues from US government contracts jumped 45 per cent to $373mn in the first three months of 2025, surpassing analyst expectations of $358mn. The company was recently awarded a $30mn contract with US Immigration and Customs Enforcement to surveil immigrants and won a $178mn contract with the US Army in March to develop AI-enabled military trucks. Meanwhile, commercial revenue from US customers soared 71 per cent to $255mn. Commercial contract gains prompted Palantir to increase its revenue outlook for the year to a range of $3.89bn to $3.902bn from $3.741bn to $3.757bn three months ago. Karp said in his quarterly letter that Palantir's interest in arming the US and ensuring the country's defence and intelligence agencies had access to better software than those of its adversaries "was for years dismissed as politically fraught and ill-advised". "We, the heretics, this motley band of characters, were cast out and nearly discarded by Silicon Valley. And yet there are signs that some within the Valley have now turned a corner and begun following our lead."

Palantir raises annual revenue forecast on booming AI demand

May 5 (Reuters) - Data and analytics firm Palantir Technologies raised its annual sales forecast on Monday, betting on strong demand for its products that help businesses adopt generative AI technology. Still, shares of the company fell more than 2% in extended trading. Palantir (PLTR.O), opens new tab has benefited from a boom in the adoption of GenAI technology as enterprises leverage the company's expertise in managing and analyzing data to help train and run new AI apps using its platform. The Denver, Colorado-based company now expects revenue in fiscal year 2025 between $3.89 billion and $3.90 billion, up from its earlier forecast of sales between $3.74 billion and $3.76 billion. Analysts on average expect $3.75 billion in annual sales, according to data from LSEG. Palantir's shares are up more than 60% this year, widely outperforming the benchmark S&P 500 Index, which is down more than 3%, as investors expect the company to benefit from AI deployment and government spending on defense-related tech even as global markets falter because of trade-related uncertainties. Co-founded by tech billionaire Peter Thiel, Palantir has been increasingly diversifying into commercial applications as it works to reduce its dependence on government spending. Palantir now expects U.S. businesses to drive more than $1.18 billion in sales this year, up from its earlier expectation of more than $1.08 billion. It also forecast second-quarter revenue above estimates. Still, a significant portion of Palantir's sales is led by its services for governments, such as supplying software that visualizes the position of troops in a battle. The company's early financial backers included the CIA's venture arm, In-Q-Tel. The U.S. government represented more than 42% of revenue in the three months ended March 31. Total sales of $883.9 million during that period beat estimates of $862.8 million. Big U.S. government contractors such as Accenture (ACN.N), opens new tab and IBM (IBM.N), opens new tab have flagged a hit to their businesses from cost-cutting efforts by President Donald Trump's administration mostly through the Department of Government Efficiency. During an interview with Reuters, Palantir's executives did not directly address questions on whether DOGE spending cuts, spearheaded by billionaire Elon Musk, would impact the company's contracts. "Focus on efficiency is excellent for Palantir. We very much support a push by the U.S. government to push on efficiency across the government," finance chief David Glazer told Reuters. Reporting by Arsheeya Bajwa in Bengaluru; Editing by Anil D'Silva Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

Palantir is one stock to own in hopes of its growing to a trillion dollar market cap, investor says

Palantir is one stock to hold for the long term despite the stock market's recent volatility, as the artificial intelligence software company might eventually land a $1 trillion market value, according to Will McGough, Prime Capital Financial director of investments. The investor said Palantir remains a buy even though the stock has rallied 55% this year. The latest move has lifted the company's valuation to $281 billion, surpassing Salesforce, which is 10 times bigger in terms of revenue. Palantir was one of three stocks McGough called out as buys during CNBC's " Power Lunch ." Palantir Shares of Palantir have built on last year's 340% advance as the data analytics and AI software firm recently joined the top 10 largest U.S. technology companies by market capitalization. McGough said even though he's not a big fan of the stock's technical setup on the basis of price charts after this year's huge runup, the stock has a plenty more room to go in the long run. "I think you own for the ride to a trillion dollar market cap knowing it's going to be extremely volatile," McGough said. Palantir has price-to-earnings and other multiples that are far higher than its large-cap tech peers. Palantir currently trades for 520 times trailing earnings, almost 200 times forward earnings and 90 times revenue. Lyft On Lyft, which just reported earnings this week, McGough suggested investors hold it if they already own it. McGough said the wildcard about Lyft is that they could be a potential acquisition target. Lyft has been a big outperformer this year, up about 28%. The stock got a boost this week after the ride-sharing company boosted its share buyback authorization to $750 million as part of its first quarter earnings report. LYFT YTD mountain Lyft in 2025. Expedia McGough believes travel agency Expedia is a sell as it faces a tough fundamental backdrop due to trade conflict and rising protectionism that may serve to dampen consumer spending. Meanwhile, it's an old tech name in the cross hairs of AI, McGough added. EXPE YTD mountain Expedia Earlier this week, Expedia reported mixed first-quarter results. While earnings exceeded expectations, revenue came in slightly below analysts' consensus estimate, according to FactSet. On top of that, the company lowered its gross booking guidance for 2025.

Palantir lifts full-year guidance as CEO Karp cites 'tectonic shift' in AI adoption

Here's how the company did compared with LSEG consensus estimates: "We are delivering the operating system for the modern enterprise in the era of AI," CEO Alex Karp wrote in an earnings release Monday, adding that the company is in the "middle of a tectonic shift in the adoption" of its software. The defense technology company said that its commercial revenues grew 71% from a year ago to $255 million, while its government segment sales jumped 45% to $373 million. The company is forecasting that U.S. commercial revenues will top $1.178 billion this year. Karp attributed Palantir's government sector growth to greater U.S. defense sector adoption of its tools. He said that demand for large language models and the software supporting it has "turned into a stampede." Palantir's revenues grew 39% from $634.3 million in the year-ago period. Net income rose to about $214 million, or 8 cents per share, from roughly $105.5 million, or 4 cents per share, in the year-ago quarter. U.S revenues jumped 55% to $628 million, Palantir said.

Palantir shares dip despite Q1 revenue beat and raised full-year outlook - SiliconANGLE

Palantir shares dip despite Q1 revenue beat and raised full-year outlook Shares in Palantir Technologies Inc. fell more than 8% in after-hours trading today, despite the big data analytics company beating expectations on revenue and guidance, as investors may have been anticipating even stronger results. For its fiscal 2025 first quarter that ended on March 31, Palantir reported adjusted earnings per share of 13 cents, up from eight cents per share in the same quarter of 2024, on revenue of $883.9 million, up 39% year-over-year. Earnings per share were in line with the 13 cents expected by analysts, while Palatanir's revenue came in ahead of an expected $863 million. Palantir saw U.S. revenue grow 55% year-over-year to $828 million, with U.S. commercial revenue up 71% to $255 million and U.S. government revenue up 45% year-over-year to $373 million. The quarter also saw the company booking its highest quarter of U.S. commercial contract value, which came in at $810 million, up a whopping 183% year-over-year. Total U.S. commercial remaining deal value was $2.32 billion as of the end of March, up 127% year-over-year. New deals and customers were key to Palantir's strong figures, with the company's customer count up 39% year-over-year. The company closed 139 deals of at least $1 million in the quarter, 51 deals of at least $5 million and 31 deals of at least $10 million. Business highlights in the quarter included the integration of xAI Corp.'s Grok-2 and Grok-2 Vision models into Palantir's Artificial Intelligence Platform, enhancing capabilities across Logic, Automate, Pipeline Builder and other AIP tools with advanced language and vision support. Palantir also introduced a new Model Experiments application programming interface that enables developers to track, visualize and compare machine learning training runs using Python, making it easier to optimize models within existing workflows. The quarter also saw Palantir announcing a strategic partnership with Databricks Inc. that is aimed at combining Palantir's AI operating system with Databricks' data engineering and analytics platform. The collaboration is looking to deliver a more unified AI and data solution for enterprise and government customers. "We are in the middle of a tectonic shift in the adoption of our software, particularly in the U.S., where our revenue soared 55% year-over-year, while our U.S. commercial revenue expanded 71% year-over-year in the first quarter to surpass a one-billion-dollar annual run rate," said Alexander C. Karp, co-founder and chief executive officer of Palantir, in the company's earnings release. "We are delivering the operating system for the modern enterprise in the era of AI." "Consequently, we are raising our full-year guidance for total revenue growth to 36% and our guidance for U.S. commercial revenue growth to 68%," added Karp. For its fiscal second quarter, Palantir expects revenue of $934 million to $938 million and adjusted income from operations of $401 million to $405 million. The revenue outlook was solidly ahead of the $899.4 million expected by analysts. For its full fiscal year, the company expects revenue of $3.89 billion to $3.902 billion, up from a previous full-year outlook of $3.74 billion to $3.75 billion.

Palantir raises annual revenue forecast on booming AI demand

The Denver, Colorado-based company now expects revenue in fiscal year 2025 between $3.89 billion and $3.90 billion, up from its earlier forecast of sales between $3.74 billion and $3.76 billion. Analysts on average expect $3.75 billion in annual sales, according to data from LSEG. Palantir now expects US businesses to drive more than $1.18 billion in sales this year, up from its earlier expectation of more than $1.08 billion.Data and analytics firm Palantir Technologies raised its annual sales forecast on Monday, betting on strong demand for its products that help businesses adopt generative AI technology. Still, shares of the company fell more than 2% in extended trading. Palantir has benefited from a boom in the adoption of GenAI technology as enterprises leverage the company's expertise in managing and analyzing data to help train and run new AI apps using its platform. The Denver, Colorado-based company now expects revenue in fiscal year 2025 between $3.89 billion and $3.90 billion, up from its earlier forecast of sales between $3.74 billion and $3.76 billion. Analysts on average expect $3.75 billion in annual sales, according to data from LSEG. Palantir's shares are up more than 60% this year, widely outperforming the benchmark S&P 500 Index, which is down more than 3%, as investors expect the company to benefit from AI deployment and government spending on defense-related tech even as global markets falter because of trade-related uncertainties. Cofounded by tech billionaire Peter Thiel, Palantir has been increasingly diversifying into commercial applications as it works to reduce its dependence on government spending. Palantir now expects US businesses to drive more than $1.18 billion in sales this year, up from its earlier expectation of more than $1.08 billion. It also forecast second-quarter revenue above estimates. Still, a significant portion of Palantir's sales is led by its services for governments, such as supplying software that visualizes the position of troops in a battle. The company's early financial backers included the CIA's venture arm, In-Q-Tel. The U.S. government represented more than 42% of revenue in the three months ended March 31. Total sales of $883.9 million during that period beat estimates of $862.8 million. Big U.S. government contractors such as Accenture and IBM have flagged a hit to their businesses from cost-cutting efforts by President Donald Trump's administration mostly through the Department of Government Efficiency. During an interview with Reuters, Palantir's executives did not directly address questions on whether DOGE spending cuts, spearheaded by billionaire Elon Musk, would impact the company's contracts. "Focus on efficiency is excellent for Palantir. We very much support a push by the U.S. government to push on efficiency across the government," finance chief David Glazer told Reuters.

Palantir's Gravity-Defying Rally Faces Reckoning As Valuation Reaches Danger Zone - Palantir Technologies (NASDAQ:PLTR)

Palantir Technologies Inc. PLTR has emerged as the brightest star of the S&P 500 over the past year, but its meteoric rise -- up 440% in twelve months and 53% year-to-date through May 9 -- is now confronting a valuation wall that even the hardest bulls are struggling to justify. Is Palantir Trading At Bubble-Like Valuations: How High Is Too High? With shares closing at $115 on Friday and peaking at a record $125 this week, Palantir is now trading at 500 times trailing twelve-month earnings, an outlier among all companies in the S&P 500 and Nasdaq 100. That's nearly triple the valuation of most AI-linked stocks and more than 14 times higher than tech heavyweights like Nvidia Corp. NVDA and Microsoft Corp. MSFT, which trade at price-to-earnings ratios of 37x and 32x, respectively. While many would argue that Palantir is a bet on the future rather than the past, even when factoring in projected earnings, the valuation picture remains extreme. Palantir trades 190 times forward earnings, raising red flags that the price has disconnected from even the most optimistic projections. Most Expensive S&P 500 Stocks By Trailing P/EMost Expensive S&P 500 Stocks By Forward P/EThe Bullish Case Still Has A Pulse Despite this, investor enthusiasm remains sky-high. The company's ability to secure lucrative defense contracts and its reputation as an artificial intelligence leader has driven continued demand for the stock, even during broader market corrections. Palantir notably held its ground during the April selloff triggered by the Donald Trump's tariff escalation, never breaching its 200-day moving average. Larry Tentarelli, Chief Technical Strategist at Blue Chip Daily Trend Report, said Palantir "remains our top-ranked technology sector stock," citing its technical strength and AI leadership. Tentarelli said the recent earnings quarter confirmed their view and suggested any consolidation in the $100-$110 range could offer a new buying opportunity. "We view this stock as a buy here or on pullbacks," he said. His firm maintains a long position and sees Palantir as dominant in its niche government and commercial AI applications. Palantir's Analyst Consensus: Caution Ahead Out of 25 accredited analysts covering the stock, only one rates it a 'Strong Buy' and just three rate it 'Buy'. The overwhelming consensus is to 'Hold', with the median price target 18% below current levels. Goldman Sachs' analyst Gabriela Borges, CFA maintained a 'Neutral' rating this week and raised her 12-month price target to $90, still 22% below the current price. "Our positive view of Palantir's growth is balanced by longer-term ecosystem risks - the industry moving from peak custom to more off-the-shelf adoption - and the stock's premium valuation," Borges said. She highlighted Palantir's enterprise value-to-sales multiple at 81x, far exceeding the sector average of 12x, and its growth-adjusted EV/sales ratio (the so-called Rule of 40) at 0.97x, compared to just 0.28x for comparable software companies growing 20% or more. While fundamentals are struggling to keep pace with price momentum, Palantir's rally shows no immediate signs of collapse. Still, unless earnings growth or profitability scales up dramatically, the company may be heading toward a painful reckoning. Read now: Cathie Wood Says AI Will 'Disrupt The Traditional World Order' And Replace Search Engines Like Google Photo: Shutterstock PLTRPalantir Technologies Inc$116.45-2.27%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum99.35Growth88.18Quality-Value2.59Price TrendShortMediumLongOverviewAXONAxon Enterprise Inc$684.65-0.32%CRWDCrowdStrike Holdings Inc$410.66-4.19%CSGPCoStar Group Inc$74.84-1.32%DASHDoorDash Inc$183.420.25%DAYDayforce Inc$56.94-2.38%DLRDigital Realty Trust Inc$166.870.10%INTCIntel Corp$21.200.97%IRMIron Mountain Inc$97.060.33%MSFTMicrosoft Corp$439.380.28%NVDANVIDIA Corp$116.63-0.63%TSLATesla Inc$298.134.67%VTRVentas Inc$66.130.84%WELLWelltower Inc$149.640.94%Got Questions? AskHow will Palantir's valuation affect investors?Which AI stocks could outperform Palantir?What are the risks for tech investors now?How might Nvidia benefit from Palantir's challenges?Who stands to gain from Palantir's defense contracts?Which companies are at risk from Palantir's valuation concerns?What alternatives to Palantir should investors consider?How could market corrections impact tech stocks?What does analyst caution mean for future investments?Is Palantir's AI leadership sustainable long-term?Powered ByMarket News and Data brought to you by Benzinga APIs

PLTR Stock Remains Long-Term Buy Despite Sky-High Valuation, Says Prime Capital's McGough -- Joins Dan Ives In Predicting $1 Trillion Market Cap Amid AI Surge - Expedia Group (NASDAQ:EXPE), Lyft (NASDAQ:LYFT)

Palantir Technologies Inc. PLTR remains a stock to hold for the long term despite recent market volatility, with the potential to reach a $1 trillion valuation, according to Will McGough, Director of Investments at Prime Capital Financial. What Happened: McGough maintains his buy recommendation on the artificial intelligence software company even after its shares have surged 55% this year, pushing its market cap to $281 billion, now exceeding Salesforce, which generates 10 times more revenue, reported CNBC. "I think you own for the ride to a trillion-dollar market cap knowing it's going to be extremely volatile," McGough said. The bullish outlook aligns with Wedbush Securities analyst Dan Ives, who recently raised his price target from $120 to $140 while calling Palantir "the Messi of AI" and "a core name in the AI Revolution." Ives similarly projected a trillion-dollar valuation within three years, citing the company's success with its AIP product and multi-million dollar deals pipeline. See Also: GOP Megadonor Ken Griffin Warns Trump Tariffs Are 'Terrifying,' Says Government Is Picking 'Winners And Losers' Amid Soaring Trade Deficit Why It Matters: Palantir's lofty valuation metrics remain controversial, trading at 520 times trailing earnings, almost 200 times forward earnings and 90 times revenue. The disparity has created a stark divide between institutional skeptics and retail investors who have driven the stock up over 400% in the past year. Get StartedStart Futures Trading Fast -- with a $200 Bonus Join Plus500 today and get up to $200 to start trading real futures. Practice with free paper trading, then jump into live markets with lightning-fast execution, low commissions, and full regulatory protection. Get Started The data analytics firm reported impressive first-quarter results, with revenue beating expectations at $883.86 million, up 39% year-over-year. U.S. commercial revenue specifically surged 71%, while CEO Alex Karp described a "tectonic shift" in software adoption. Price Action: Palantir closed at $117.30 on Friday, down 1.55% for the day. In after-hours trading, the stock dipped another 0.49% to $116.72. Year to date, Palantir shares have surged 56%. Palantir Technologies shows strong growth and momentum, but ranks low on valuation metrics, according to Benzinga Stock Edge Rankings. PLTR shares exhibit a positive price trend across both short- and long-term periods. Check the detailed report here. Read Next: Ethereum, Dogecoin And Other Altcoins May Erase '4 Years Suffering' In Just Months, Says Michael Van De Poppe Amid Historic Bullish Divergence Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Image Via Shutterstock EXPEExpedia Group Inc$157.00-7.10%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum88.67Growth97.37Quality-Value31.01Price TrendShortMediumLongOverviewLYFTLyft Inc$16.7028.5%PLTRPalantir Technologies Inc$116.72-2.04%Got Questions? AskWhich AI companies could follow Palantir's lead?How will software adoption impact tech investments?Which ETFs focus on AI growth prospects?Are there emerging tech firms to watch alongside PLTR?How might Palantir's valuation affect sector trends?Which investors are bullish on AI stocks now?What shifts in commercial revenue could benefit investors?Could institutional skepticism create buying opportunities?What role will data analytics play in future investments?Which competitors might struggle against Palantir?Powered ByMarket News and Data brought to you by Benzinga APIs

Prediction: Palantir Sell-Off Could Be a Buying Opportunity, but With One Major Caveat | The Motley Fool

One of the biggest hurdles for investors interested in buying Palantir Technologies (PLTR 6.30%) stock has been its high valuation. But it can overcome this by continuing to accelerate its revenue growth and grow into that valuation. While the stock price sank following its Q1 results, the company once again showed accelerated revenue growth in the quarter and raised its revenue outlook for the year. However, with a high valuation comes high expectations, and while it was a very strong report, it wasn't perfect. The first quarter of 2025 marked the seventh straight time that Palantir has seen its quarterly revenue growth accelerate. During that span, growth increased from 13% in fiscal 2023's Q2 to 39% last quarter. Meanwhile, its Q1 revenue of $883.9 million easily surpassed management's forecast of $858 million to $862 million. Source: Palantir quarterly reports. Palantir's artificial intelligence platform (AIP) continues to be its primary growth driver, particularly with U.S. commercial customers. The company credited AIP's ontology, or the operational layer for AI that connects digital assets (data sets and models) to their real-world counterparts (products or orders). It said AIP is entering its next phase of production, in which customers can use its platform to create AI agents to help drive enterprise autonomy. It cited examples of insurance giant AIG using AI underwriting agents built on its platform, as well as a hospital, Tampa General, using AI agents to monitor for sepsis. It also noted that customers are starting to expand rapidly, quickly moving on from boot camps or pilots to sign multi-year contracts. As a result, U.S. commercial revenue soared 71% to $255 million in the quarter. Meanwhile, its U.S. commercial remaining deal value, which refers to revenue it will recognize in the future from contracts already signed, surged 127% to $2.32 billion. On the government side of its business, revenue climbed 45% year over year to $487 million. U.S. government revenue increased by 45% to $373 million. The company said it remained confident that it was well-positioned to navigate the current federal budget cuts, noting that this should highlight the value of its offerings. Therefore, it expects to garner bigger budget allocations within the Department of Defense and other agencies. Revenue growth on the international government side also rose 45% to $114 million. The company highlighted its new deal with NATO and its continued work with the U.K. healthcare system. One weak spot, however, was with international commercial customers. Revenue for this group fell 5% to $141 million. Palantir said it continues to see headwinds in Europe, while it is looking to capitalize on opportunities in Asia and the Middle East. However, its top priority remains the U.S. On its earnings call, when asked about Europe, Palantir said the region "doesn't get AI yet." Net dollar retention, which measures revenue growth from existing customers that have been with the company for more than a year, was 124%. A number above 100% indicates expansion. This metric was up from 120% last quarter and demonstrates the continued growth the company is having within its existing customer base. Adjusted earnings per share (EPS), meanwhile, rose from $0.08 to $0.13 year over year. That was only in line with the analyst EPS consensus, as compiled by the London Stock Exchange Group. Looking ahead, the company guided for full-year 2025 revenue of between $934 million and $938 million, representing growth of 38% at the midpoint. It also raised its full-year revenue guidance, taking it from a range of $3.741 billion to $3.757 billion to a new range of $3.890 billion to $3.902 billion, representing 36% growth. As noted at the beginning, one of the biggest issues surrounding Palantir is its valuation. The stock trades at a forward price-to-sales (P/S) ratio of 66 times 2025 analyst estimates and just below 52 times 2026 estimates. That's just a very high valuation. However, if the company can keep growing its revenue at around a 40% clip per year, it can grow into its current multiple. At that rate, it would get to around $15 billion in revenue in 2029 for a P/S multiple of 17 in just over three years. Continue that growth further out, and it would get Palantir close to $30 billion in revenue in 2031, which in around five years would give it a forward P/S multiple of 8.5. So the recent double-digit percentage dip in the stock could be a buying opportunity, with the caveat that the company must continue its current pace of revenue growth over the next several years. Given how the company has positioned itself as an AI operating system for AI agents, I don't think this scenario is far-fetched. The company has a lot of momentum; now it just needs to keep it.

Where Will Palantir Stock Be in 3 Years? | The Motley Fool

With its shares up 58% year to date, Palantir Technologies (PLTR 8.01%) embarrassed its naysayers -- it has been repeatedly testing new highs despite calls of overvaluation. But on some level, the excitement is understandable. Palantir operates at the intersection of two of the market's biggest hype drivers right now: generative AI and President Donald Trump's election. But could these catalysts help the data analytics giant justify its valuation over the next three years and beyond? Since its initial public offering in 2020, Palantir enjoyed a bit of a cult following, and it isn't hard to see why many people find the data analytics business exciting. In its early days, it was partially backed by the CIA's investment arm, Q-Tel, and its software helped the U.S. track down Osama bin Laden in 2011. Recently, the company began offering its Artificial Intelligence Platform (AIP), designed to offer real-time insights to operators in high-stakes environments like battlefields. Similar technology is already being used by the armed forces of Ukraine and Israel in their respective conflicts. With its combination of mystery and accessibility, Palantir developed a broad appeal as an investment: It's one of the top 10 most-held stocks in portfolios on the retail investor-friendly platform Robinhood. But retail investors can often prioritize hype over substance: Failing meme stock GameStop is right behind it on Robinhood's top 10 list. While Palantir isn't a meme stock, it is arguably beginning to blur the line. With a price-to-earnings (P/E) ratio of 480, Palantir trades at a huge premium. For context, the tech-heavy Nasdaq-100 has an average P/E of just 29. And the AI industry leader, Nvidia, trades for a P/E of 39, despite growing its profits by a whopping 80% in the fourth quarter. Palantir's business is not growing fast enough to justify its premium. Revenue grew by a respectable 39% year over year to $883.9 million, driven by strength in its US commercial segment (up by 71%, where it sells data analytics tools for enterprise use. However, analysts are worried about its international segment. Overseas sales fell by 5% year over year because of weakness in Europe, where businesses have been slow to adopt AI-related services compared to the U.S. and China. However, this has more to do with the continent's corporate culture, which is outside of Palantir's control. Palantir's non-cash outflows may be a bigger red flag. While the company reported an adjusted EBITDA of $397.3 million in Q1, that sum adds back a whopping $214.6 million in stock-based compensation and related taxes. While offering employees stock-based compensation can save cash and help incentivize workers by giving them a share of the business, it also causes equity dilution, reducing prior shareholders' claims on future earnings. Over the next three years, Palantir stands to benefit from Trump's presidency. He already rolled back some restrictions on AI to prioritize free market innovation. Meanwhile, he aims to increase the nation's military budget to a record $1 trillion, which could increase demand for Palantir's services -- especially as the armed forces further adopt next-generation technologies. That said, even in the best-case scenario, it's hard to see Palantir justifying its current valuation. While the company's cult following means that the stock may not crash in the near term, long-term investors may want to look for less speculative ways to bet on the AI industry.

Palantir Stock Is Up 550% Since Early 2024. History Is Clear About What Happens Next. | The Motley Fool

That tremendous share-price appreciation was driven by a series of increasingly impressive financial results. Palantir has emerged as a leader in artificial intelligence (AI) platforms, and retail investors, in particular, have become enamored with the company. But Palantir is currently the most expensive software stock on the market by a wide margin. History says this will happen next. Louie DiPalma of William Blair Research says Palantir is the most expensive software stock. "The company's valuation trades at 64 times 2026 consensus sales. CrowdStrike is the second highest name in all of software in terms of valuation at 18 times," he told Yahoo Finance. That means Palantir could fall 70% and still be the most expensive software stock, based on its forward price-to-sales ratio (P/S). Palantir is also extraordinarily expensive in terms of trailing-12-month sales. It hit 107 times sales in February and recently retested that level by rebounding to 100 times sales in early May. I reviewed the valuations of more than 50 software stocks over the last 20 years, and only six achieved a P/S ratio above 100. All of them eventually fell at least 70%, as detailed below: As shown above, only six software stocks (excluding Palantir) have reached 100 times sales in the last two decades, and all of them fell sharply after reaching that extraordinarily high valuation. The average peak-to-trough decline was 81%. Investors can apply that number to Palantir to model what might happen in the future. Palantir traded at $125 per share when it peaked at 107 times sales on Feb. 18, 2025. Its share price will eventually fall 81% to $23.75 if its performance matches the historical average. That implies 78% downside from its current share price of $110. Of course, past performance is never a guarantee of future results, but history makes one thing crystal clear: Palantir's present valuation of 87 times sales is unsustainable. I say that because none of the six stocks listed above currently have P/S ratios above 37. Palantir reported strong first-quarter financial results. Customers climbed 39% to 769, and the average existing customer spent 124% more. In turn, revenue increased 39% to $884 million, the seventh-straight acceleration, and non-GAAP earnings increased 62% to $0.13 per diluted share. The stock sold off following the report, likely due to concerns about valuation, but Dan Ives at Wedbush made a bold prediction during a CNBC interview. "Look, I believe this is going to a trillion-dollar market cap in the next two to three years," he said. That forecast implies 285% upside from its current market value of $260 billion. However, other Wall Street experts are less optimistic, at least in the near term. Among the 27 analysts who follow Palantir, the median 12-month target price is $98 per share. That implies 11% downside from its current share price of $110, and the lowest target price of $40 per share implies 64% downside. I think prospective investors should wait for a better entry point before buying the stock, but current shareholders should stay put, provided they plan to hold their shares for at least three to five years. History says Palantir's present valuation of 87 times sales is unsustainable, which means the stock is likely to be very volatile in the coming months.

Palantir Just Delivered Phenomenal News to Investors, but Is It Too Late to Buy This Pricey Stock? | The Motley Fool

Amid market turmoil and questions about the economy ahead, investors wondered if Palantir Technologies (PLTR 1.44%) would show signs of a slowdown when it reported earnings earlier this week. After all, the software company depends on spending from the government and U.S. companies, and the government already has proposed significant budget cuts across departments. U.S. companies may face pressure from import tariffs ahead. However, Palantir's earnings in the first quarter roared higher. The company's government and commercial businesses reported double-digit growth, and customer count and deal value climbed. Palantir also continued on its path of successfully balancing growth and profitability. On top of this, Chief Executive Officer Alex Karp delivered phenomenal news to investors. (I'll get to that below.) Though all of this sounds fantastic, investors and analysts have questioned the idea of buying Palantir shares today for one specific reason: valuation. Though Palantir's earnings performance is strong, the stock is pricey, trading for a mind-boggling 186x forward earnings estimates. This is after the shares climbed more than 1,000% over the past three years. Considering Karp's comments and the company's bright future, is it too late to buy this expensive stock? Here's a look at the company's business and its latest earnings figures. Palantir sells software platforms that aggregate a customer's data and help that customer make smart use of it -- from developing strategies and plans on a battlefield to organizing workflow and patient placement at a hospital. The use of the software is far-reaching. To further strengthen its offerings, Palantir launched its Artificial Intelligence Platform (AIP) two years ago, which uses artificial intelligence (AI) to drive data gathering and the development of often game-changing plans customers can apply to their own unique problems. This new platform has helped growth surge in recent quarters, and this continued in the first quarter of this year. Palantir reported a 71% increase in U.S. commercial revenue and a 45% gain in U.S. government revenue in the period, showing that both businesses are booming. The company recorded a record level of U.S. commercial total contract value of $810 million -- up 183% year over year. Customer count advanced in the double digits, and U.S. commercial customers reached 432. It's important to remember that U.S. commercial customers totaled only 14 about five years ago. Finally, the company also demonstrated its strength in balancing growth and profit by reporting a Rule of 40 score of 83%. A software company should have a score of at least 40% to show its success in this area. By doubling that, Palantir is hitting it out of the park. Now I'll consider the phenomenal news Karp delivered during this report. "Palantir is on fire," Karp said during the company's earnings call. And he wrote in his letter to shareholders that, "We believe our results are indicative of a revolution sweeping across our business and industry." Karp says customers are rushing to get on board, to apply AI-led data gathering and AI-assisted decision-making to their projects and generate results they never would have believed possible. While in the past, potential customers would take a while to assess and consider working with Palantir, Karp says that today he's seeing a "ravenous whirlwind of adoption." Palantir is so optimistic about what's ahead that it raised its full-year 2025 guidance for revenue to the range of $3.89 billion to $3.9 billion from the range of $3.74 billion to $3.75 billion. The company also lifted its forecasts for U.S. commercial revenue, adjusted income from operations, and adjusted free cash flow. Palantir expects GAAP operating income and net income every quarter this year. All of this offers us reason to be optimistic about Palantir's earnings performance in 2025. Even a potentially tougher economic environment may not get in the way, as customers use Palantir's platforms to make their operations more efficient -- something that should help them better navigate economic downturns. Palantir is a fantastic stock to own -- but is it too late to get in on the stock now, considering its price? It's true that the valuation I mentioned above generally would be an argument to turn away from a stock. But in the case of Palantir, considering its stellar quarter-after-quarter earnings growth and future prospects, unless you're a value investor, you may want to set the valuation argument aside. A forward price-to-earnings ratio looks at potential earnings over the coming 12 months but doesn't consider earnings five or 10 years down the road. Palantir may be in the early days of its commercial and government business growth story, and as a result, a lot more growth should be ahead. This means Palantir might not be as expensive as you think -- at least if you hold on for the long term. For growth investors who don't mind seeing the stock potentially dip here and there in the near term and are ready to hold on as this story advances, Palantir makes a solid buy -- even at today's lofty valuation.

Is Artificial Intelligence (AI) Stock Palantir Technologies in a Bubble? We Just Got Our Answer... | The Motley Fool

Putting aside the exceptional volatility we've witnessed on Wall Street since the beginning of April, the can't-miss trend over the last two and a half years has unquestionably been the evolution of artificial intelligence (AI). In its simplest form, AI empowers software and systems with the ability to reason and act on their own. This capacity to make split-second decisions without human oversight, as well as evolve to (potentially) learn new skills or jobs, gives this technology a truly jaw-dropping addressable market. In Sizing the Prize, PwC pegged this market potential at $15.7 trillion, globally, by the turn of the decade. When most investors think of the AI revolution, Nvidia (NVDA 2.95%) is probably the first company that comes to mind. In less than two years, Nvidia went from being a fringe leader in the tech industry, with a $360 billion market cap, to the greatest thing since sliced bread, with a valuation that easily topped $3 trillion. Nvidia's Hopper (H100) graphics processing units (GPUs) and successor Blackwell GPU architecture rapidly became the preferred hardware in Al-accelerated data centers. But Nvidia has been usurped as Wall Street's AI darling by data-mining specialist Palantir Technologies (PLTR 1.44%). Heading into this week, Palantir was worth $293 billion, and its shares had risen by roughly 1,840% since the start of 2023. It went from being one of many high-growth tech stocks to a foundational piece of the AI revolution. Yet following the release of Palantir's much-anticipated first-quarter operating results, there's a new label that can be added: Wall Street's biggest bubble stock. Though I'll explain how it's a bubble stock in detail in a moment, let's take a closer look at how Palantir has dazzled Wall Street and added $278 billion in market value in 29 months. The biggest catalyst for Palantir is that its AI-driven software-as-a-service (SaaS) solutions can't be duplicated at scale. While the company's Gotham and Foundry platforms may contend with small-scale competition, there simply isn't a one-for-one replacement for the services they provide. Nothing on Wall Street is more valued by investors than a sustainable moat -- and Palantir certainly offers one. Gotham continues to be the crown jewel. This is the segment that lands multiyear contracts with the U.S. federal government and its allies. Gotham handles data collection and analysis, as well as plays a critical role in military mission planning and execution. America's robust defense spending has led to pretty consistent growth. In the March-ended quarter, U.S. government revenue soared by 45% from the prior-year period. Foundry hasn't been a slouch, either. This relatively newer platform leans on AI and machine learning to help businesses make sense of their data and streamline their operations. U.S. commercial revenue surged a whopping 71% during the first quarter, which is an indication that Palantir is just scratching the surface with this segment, as well as earning subscriptions from larger companies. Another reason Palantir has excelled is its push to recurring profitability, which occurred well before anyone on Wall Street had expected. Profits help to validate Palantir's dual-platform approach, and its sustained double-digit sales growth rate has clearly excited the investing community. Lastly, Palantir closed out March with $5.43 billion in cash, cash equivalents, and marketable securities, which represents about a $200 million boost from where it ended 2024. Having a lot of cash and no debt means CEO Alex Karp and his team can aggressively reinvest in its AI-powered platforms, as well as undertake shareholder-friendly actions at times, such as share buybacks. Considering the uncertainty surrounding President Donald Trump's tariff policy, as well as the possibility of the U.S. federal government reducing defense spending, investors were particularly interested in Palantir's forward-looking sales and adjusted free cash flow (FCF) guidance for the recently completed quarter. In early February, Palantir guided for $3.741 billion to $3.757 billion in full-year sales, with $1.5 billion to $1.7 billion in full-year adjusted FCF. On Monday, May 5, it upped its 2025 sales guide to $3.89 billion to $3.902 billion -- an increase of $147 million at the midpoint -- as well as lifted the high and low end of its adjusted FCF by $100 million to $1.6 billion to $1.8 billion. While Palantir increasing the midpoint of its sales guidance by 3.92% might sound impressive, it comes on the heels of its stock tipping the scales at north of 100 times trailing-12-month sales entering this week. Based on the midpoint of the company's now-dated 2025 sales guidance ($3.749 billion), Palantir would have been valued at a price-to-sales (P/S) ratio of roughly 78 come February 2026 (i.e., when it reports its fourth-quarter operating results). Updating for the new guidance, which calls for a midpoint of $3.896 billion in full-year revenue, lowers its projected year-end P/S ratio to (drum roll) 75.2! It hardly makes a dent. To put into context just how unbelievably expensive Palantir stock is relative to sales, take a closer look at how other market-leading businesses performed prior to bubble-bursting events. Before the dot-com bubble burst, Microsoft, Amazon, and Cisco Systems all peaked at respective P/S ratios ranging from roughly 31 to 43. I added Nvidia to this chart, as well, which topped out at a P/S ratio of just over 42 last summer. Though there are other public companies with P/S ratios north of 100, what we don't see is market-leading megacap businesses valued at P/S ratios north of 40 for any extended period -- let alone a P/S ratio that's camped out at more than 100! To add fuel to the fire, every next-big-thing innovation for more than 30 years has navigated its way through a bubble-bursting event early in its expansion. Investors have persistently overestimated how quickly a new technology will be utilized and adopted, which eventually leads to outsized expectations not being met. While a company like Nvidia would almost immediately feel the pain associated with an AI bubble-bursting event, Palantir Technologies would be partially insulated by its multiyear government contracts and Foundry subscription revenue. But "partially insulated" doesn't mean immune. Palantir's unjustifiable valuation premium would almost certainly come under fire if the AI bubble bursts, which history suggests will eventually happen. Rarely are stock-specific bubbles this easy to recognize. Though I do believe Palantir is worthy of some level of premium due to its sustainable moat and recurring revenue, no market leader has been able to sustain a P/S ratio of 30, let alone 75 or 100. Palantir is, in my view, Wall Street's biggest bubble stock.

Prediction: 3 Stocks That Will Be Worth More Than Palantir Technologies 5 Years From Now | The Motley Fool

Few stocks have sizzled as much as Palantir Technologies (PLTR -1.49%) over the last 12 months. Shares of the data analytics software provider more than quadrupled during the period. Palantir stock is up more than 40% year to date. However, Palantir isn't anywhere near the top of the list of stocks I think will be the biggest winners for investors over the long run. And some of those stocks could outperform through the rest of this decade, too. I predict three stocks will be worth more than Palantir five years from now. Intuitive Surgical's (ISRG -0.28%) market cap is roughly $70 billion smaller than Palantir's right now. But I suspect the tables could be turned in the not-too-distant future. Granted, Palantir is growing more rapidly. However, Intuitive Surgical continues to deliver impressive growth, too. The robotic systems pioneer's revenue jumped 19% year over year in the first quarter of 2025. Procedure volume for Intuitive's da Vinci robotic systems should increase by 15% to 17% this year. Importantly, Intuitive Surgical looks like a bargain compared to Palantir. Sure, Intuitive's shares trade at a sky-high forward price-to-earnings ratio of 68. That seems almost cheap, though, when stacked up against Palantir's nosebleed forward earnings multiple of 196. What I like most about Intuitive Surgical is the high probability of strong future growth. Around 2.7 million procedures were performed using da Vinci last year. Intuitive estimates roughly 8 million procedures are done annually for which it already has products and clearances. The company is targeting approximately 22 million soft-tissue procedures with products and clearances under development. Alibaba Group (BABA -0.40%) is already somewhat larger than Palantir. Based on the two companies' recent revenue growth, though, some might think this dynamic could change relatively soon. I predict, though, that Alibaba will widen its market cap gap over Palantir over the next five years. Valuation plays a big factor in my projection. We've already seen how mind-blowingly high Palantir's forward earnings multiple is. Meanwhile, Alibaba's shares trade at only 12.5 times forward earnings. The company's growth prospects make its valuation look even more attractive: Alibaba's price-to-earnings-to-growth (PEG) ratio based on analysts' five-year earnings projections is a low 0.71. Artificial intelligence (AI) demand could serve as a bigger tailwind for Alibaba than it will for Palantir. Alibaba's AI-related product revenue has grown by triple-digit percentages for six consecutive quarters. Its cloud business is also directly benefiting from AI. Could my prediction about Alibaba be wrong? Maybe. If it is, the most likely culprit that limits the company's growth could be the Chinese government. However, assuming Alibaba is allowed to meet customers' needs relatively unfettered, it should remain bigger than Palantir by the end of the decade. You might wonder why Google parent Alphabet (GOOG -0.92%) (GOOGL -1.02%) is on the list. After all, the tech giant is over 7x bigger than Palantir right now. It seems to be a no-brainer that Alphabet will still be larger in five years. However, I included Alphabet because there's rampant pessimism about the company. Some have proclaimed that generative AI presents an "existential threat" to Google Search. Google has lost two major antitrust lawsuits. One potential outcome is that the business could be broken up. I don't buy into the gloom and doom surrounding Alphabet, though. I'm confident that it will continue to thrive despite these challenges. AI, including generative AI, is helping Google a lot more than it's hurting. Google Cloud's business is booming as customers develop generative AI apps in the cloud. AI Overviews in Google Search have increased search usage and customer satisfaction. I expect Alphabet's revenue will grow as it rolls out more agentic AI capabilities. What about the antitrust rulings? Admittedly, they could present problems for Alphabet. However, it will almost certainly take years for a final resolution. Alphabet could ultimately prevail. Even if not, the remedies the company is forced to make might not be too terribly bad. Regardless, I'd rather own shares of Alphabet over the next five years than I would Palantir.

Prediction: Palantir Will Be a Trillion-Dollar Company in 2030 | The Motley Fool

Palantir Technologies (PLTR -1.49%) stock has been crushing the market in 2025. It's up by 43% year to date as of this writing, which may seem a tad surprising considering its expensive valuation. After all, technology stocks have been under pressure this year on account of President Donald Trump's tariff-induced trade war, which has threatened to tip the U.S. economy into a recession. The Nasdaq Composite index, though it has rebounded from a deeper slide, is still down by more than 8% so far this year. However, Palantir's lofty valuation caught up with the stock somewhat following the release of the company's first-quarter results on Monday. The stock fell more than 12% on Tuesday even though Palantir beat Wall Street's sales expectations, delivered in-line earnings, and raised its full-year guidance. In my view, the drop in the share price looks like an opportunity for savvy investors to buy a top growth stock that they can hold for the next five years. In fact, I think Palantir's market cap could reach $1 trillion by 2030. Palantir Technologies made its name by supplying software platforms and analytics solutions to U.S. intelligence agencies and the Defense Department. It is now leveraging that expertise in the commercial market, and the good part is that customers have been queuing up to sign up for its Artificial Intelligence Platform (AIP) to improve the efficiency of their operations. AIP allows Palantir customers to integrate large language models and other AI applications into their business operations in ways that reduce costs and improve productivity. This explains why the company isn't just attracting new customers for this solution but is also winning more business from its established ones. On the latest earnings conference call, Palantir described several instances of how customers are using AIP to improve productivity. So, it wasn't surprising to see a 66% year-over-year increase in the value of contracts that Palantir booked in the first quarter. Specifically, Palantir booked $1.5 billion worth of new contracts, which took its total remaining deal value (RDV) to almost $6 billion, up 45% from a year earlier. (RDV refers to the total value of the revenue remaining to be recognized under the contracts that a company has already signed.) It is worth noting that both the RDV and the total contract value booked by Palantir last quarter exceeded the 39% year-over-year growth in its top line. This is precisely the reason the company's growth has been accelerating in recent quarters: It has been winning new contracts at a faster rate than it is fulfilling them, thanks to AI. Moreover, the company's unit economics are strong since it is getting a growing volume of business from its established customer base. This is the reason Palantir's adjusted earnings rose by an impressive 62% year over year to $0.13 per share. The healthy demand for Palantir's AI software solutions also encouraged management to increase its 2025 revenue guidance to almost $3.9 billion from an earlier estimate of around $3.75 billion. If it hits that updated guidance, its top line will be 36% higher than in 2024. However, don't be surprised to see the company do better than that given the pace at which its revenue pipeline is growing. Further guidance increases are possible as the year progresses. Last year, market research firm IDC predicted that the AI software platforms market will grow at an annual rate of almost 41% through 2028 to $153 billion. Palantir, therefore, is landing new contracts and growing its revenue pipeline at a much faster pace than its end market is expected to grow. Assuming Palantir's top line increases at even a 40% rate (in line with its end market) for the next five years, its revenue would jump to almost $21 billion in 2030 (starting from its projected 2025 revenue). The stock currently trades at 87 times sales. Even if its P/S multiple contracts to 50 after five years, its market cap could touch $1 trillion in 2030 based on its projected sales figure. That would be more than triple its current market cap. Moreover, Palantir is the No. 1 vendor of AI software platforms (according to third-party estimates), so there is a good chance that it may be able to grow at an even faster rate. Also, the combination of its position at the top of the AI software platforms space and its fast-improving revenue pipeline should allow it to continue commanding a premium valuation over the long run. And the company's favorable unit economics are likely to translate into faster bottom-line growth than top-line growth. All this makes Palantir a potential candidate for the trillion-dollar market cap club. So investors looking for a growth stock should consider buying it following its latest slip.

Prediction: 2 Unstoppable Growth Stocks That Will Be Worth More Than Palantir 1 Year From Now | The Motley Fool

After climbing 1,760% since the start of 2023, the company now has a market cap of around $280 billion as of this writing. That soaring stock price has been supported by improving financial results. The company is showing strong revenue growth and improved operating leverage as it scales. Only a handful of companies can boast bigger market caps than the AI darling today. But one year from now, investors looking at Palantir may have been better off investing in one of two smaller companies that offer even better potential than Palantir. In fact, I expect both companies will be worth more than Palantir one year from now. Palantir's financial performance over the last two years has been extremely impressive. Its revenue climbed 50% from 2022 levels by 2024. It saw particular strength in U.S. commercial revenue, which more than doubled. Management expects revenue to climb another 34% this year. Driving that growth is its AI Platform, which makes it easy for anyone to use Palantir's software to garner insights from their company's disparate data sets. Along with the strong revenue growth, Palantir has exhibited strong operating leverage as its costs remain stable while sales grow. Adjusted operating margin expanded from 24% in the first quarter of 2023 to 44% last quarter. As a result, Palantir became profitable on a generally accepted accounting principles (GAAP) basis last year and joined the S&P 500. But investors have bid up Palantir much faster than its financials have improved. The stock now trades for an enterprise value more than 70 times its expected 2025 sales. Even with its strong margin expansion, the stock's forward price-to-earnings (PE) ratio is more than 200. To say Palantir's stock is expensive might be an understatement. As such, any misstep, disappointing earnings report, or news that negatively impacts the company could send shares tumbling lower. These two companies look like much better values, and they could overtake Palantir's market cap within a year. ServiceNow (NOW 0.62%) has historically grown through its land-and-expand strategy. After introducing a best-in-class IT service management solution, it expanded to IT operations management. From there, it started offering software for HR, customer service, finance, and operations. As a result, it's seen very strong customer retention and net retention rates. It consistently sees 98% of customers renew their contracts. In 2023, the company introduced new generative AI capabilities across its suite of software, and it's seen strong uptake from its customers so far. Management says it already has over $250 million in annual contract value tied to its Now Assist AI product. It expects that number to top $1 billion by the end of next year. With $10.3 billion in current remaining performance obligations, AI is a significant growth driver for the business. More importantly, it gives customers yet another reason to stay subscribed and expand their business with ServiceNow. The company sees a lot of room for growth. It expects subscription revenue to grow from $10.6 billion last year to more than $15 billion next year. Meanwhile, it sees adjusted operating margin expanding by 100 basis points per year for the next two years, reaching 32.5%. And there's a lot of long-term growth potential still as its addressable market is both large and growing. Two years ago, it estimated the potential of 200 marquee customers was $17 billion. Today, with the addition of new services, it thinks it exceeds $30 billion. While ServiceNow isn't growing as quickly as Palantir, it's still growing nearly 20% per year and exhibiting the operating margin expansion you'd expect from a software company. Its big backlog of contracts and ability to retain revenue while attracting new customers should provide a long runway of revenue growth. While the stock looks expensive at an enterprise value of about 15 times management's outlook for 2025 sales, it trades far below the multiple of Palantir. It's not unreasonable to expect ServiceNow to maintain its valuation a year from now. With management's outlook for over $15 billion in subscription revenue and another $500 million or so in other revenue, the company could be worth $240 billion by this time next year. Uber (UBER 0.63%) has seen its stock weighed down by concerns over how autonomous vehicles (AVs) could impact its business. The company is making the case that it's the ideal partner for self-driving cars. It's announced partnerships with multiple AV companies to deploy a fleet of their vehicles in select cities around the world. It most recently launched Waymo vehicles in Austin with 100 vehicles. Management said those vehicles completed more rides than 99% of all drivers in any given day. Over the long run, AVs could be a driving force for broader adoption and use cases for Uber by driving the cost to serve lower. With a network of over 170 million riders around the world, Uber is the demand aggregator for ride-sharing, putting it in the leading position to forge strategic partnerships with more AV companies. That's a huge long-term advantage. In the near term, however, Uber's seeing very strong leverage in its operations. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded to 16.2% last quarter from 13.6% a year ago. Free cash flow climbed to $2.25 billion, up 66% year over year. Both should continue to climb as it scales the business, remains disciplined with its capital allocation, lowers its customer acquisition costs, and increases its customer lifetime value. Management touted customer retention rates at or near their all-time highs around the world in Q1. Over the next two years, management sees adjusted EBITDA approaching $10 billion thanks to steady revenue growth and operating leverage. Unlike the high-priced software stocks, Uber trades for an enterprise value just 3.5 times 2025 sales estimates. With lower margins and slower revenue growth, Uber deserves a lower multiple, but its current valuation looks very attractive. Its forward PE of about 29 while the company is growing its earnings at nearly 30% per year. With some valuation expansion, the stock would be worth about $225 billion by this time next year. If Palantir comes down in price as many Wall Street analysts expect, both ServiceNow and Uber could end up being worth more than the fast-moving AI stock within a year.

After Soaring 361% in Just 1 Year, Can Palantir Stock Keep Climbing? History Offers a Clear Answer. | The Motley Fool

Palantir has emerged as one of the biggest darlings of the artificial intelligence (AI) revolution. Over the last two years, artificial intelligence (AI) has come into focus as the next megatrend. In the capital markets, megacap technology stocks have attracted the lion's share of the attention and hype as it relates to the prospects of AI. But some smaller players are proving they also can compete with big tech. I can't think of a better example of this than enterprise software developer Palantir Technologies (PLTR -1.49%), which has seen its stock soar by 361% over the past year (as of May 6). While Palantir has become one of the most popular AI stocks, smart investors are wondering if the company's parabolic gains in share price can persist. Let's explore its valuation trends and compare these dynamics to share behavior around other important historical events in the technology sector. From there, it should become more clear which direction the stock could be headed. In just one year, Palantir's market capitalization has risen from about $46 billion to more than $250 billion. As of this writing, the company's price-to-sales ratio (P/S) is about 91. Looking at that figure in isolation doesn't tell us too much, so let's consider it in the context of some notable examples from the tech sector's history. A couple of months ago, my fellow Fool.com contributor Sean Williams wrote an astounding article referencing valuation trends during the dot-com bubble and the current AI revolution, and he subsequently indexed those results against Palantir. Prior to the dot-com crash, the price-to-sales ratios of hot names such as Cisco and Amazon peaked around 40. That's similar to what Nvidia has experienced throughout the AI boom -- its P/S ratio reached a record of 46 a couple of years ago. Yes, Palantir's P/S is now more than double what some leading tech players have traded at during periods of pronounced stock market euphoria. In that light, it's clear that Palantir's valuation is overstretched. But investors still need to consider what happened in the fallout from the dot-com boom and more recent trends in the AI arena to get a better understanding of where the stock may be headed. As of this writing, Cisco, Amazon, and Nvidia trade at P/S multiples of 4.4, 3.1, and 21.6, respectively. At a high level, I think the historical context here strongly suggests that Palantir's valuation multiples could begin to compress significantly. While such a notion might inspire some panic selling, I wouldn't encourage acting on that emotion. The reason I say that is because it is completely reasonable for valuation multiples to normalize over long time horizons. As companies mature, so do their valuation ratios. In other words, as sales and profits grow over time, so does the market value of the company -- hence, valuation multiples begin to smooth out. Moreover, just because valuation multiples begin to compress does not necessarily mean a company's market value will decline. Amazon is a much more valuable enterprise today than it was 26 years ago during the dot-com boom, when its multiples were peaking. While Cisco's valuation never fully recovered, the company's current market cap of $236 billion is still far greater than it was during the mid-2000s. This underscores the idea that holding stocks for the long run (several years or even decades) can lead to outsize gains. Furthermore, Nvidia's market cap is more than twice what it was just two years ago, when its P/S peaked at around 46. One of the key differences between Palantir and the examples above is that I do not think the AI sector is in a bubble. I think Palantir's growth prospects now are much clearer than those of Cisco or Amazon during the dot-com era, thanks in large part to surging demand for AI software. While this suggests its long-run prospects are robust, I would still encourage investors to understand the opportunity cost of investing in the company at a historically high valuation. Although history suggests that Palantir could well eclipse its current market value of $250 billion eventually, there is also quite a bit of evidence suggesting that it will be trading at more reasonable prices for new buyers at some point. For investors who want to build a position in it now, I think the best strategy to use would be dollar-cost averaging. And I'd say that to get the most out of that investment, they should be prepared to hold the stock for many years.

Is Palantir Stock Worth $1 Trillion? This Wall Street Analyst Thinks So. | The Motley Fool

Palantir Technologies (PLTR -1.49%) has been one of the best-performing stocks of the year so far, up 43% year to date. But the artificial intelligence (AI) software company's strong first quarter wasn't enough to push the stock to new highs. The stock was trading down over 10% after the earnings news. Investors have high expectations for the company's performance. The stock is priced for perfection and then some, trading at 474 times earnings. The expensive valuation is the most common reason cited for why the average Wall Street analyst has a "hold" rating on the shares. However, one Wall Street analyst remains very bullish on the stock's prospects. Wedbush analyst Dan Ives reiterated an outperform (buy) rating on the shares and raised the firm's price target from $120 to $140. But the analyst didn't stop there. He predicted that Palantir's market cap, which is $260 billion at the time of writing, will hit $1 trillion in three years. Assuming the company maintains the same number of shares outstanding, that would imply a share price of over $400. Palantir is offering solutions that are proving indispensable for a modern enterprise, which is why investors have bid the shares up to dizzying heights over the past few years. Let's explore what is driving the company's growth and what it will take to send the company's market cap to the analyst's target. Palantir continues to experience insatiable demand for its artificial intelligence (AI) platforms, and the reason is simple: It is helping businesses across the economy completely re-architect their data systems and operations around AI. In the Q1 2025 shareholder letter, CEO Alex Karp said, "The rush toward large language models, as well as the foundational software architecture that is capable of making them valuable to large organizations, has turned into a stampede." Palantir's total U.S. revenue grew 55% over the year-ago quarter. The company's AI boot camps continue to impress large corporations with what its software is capable of. Palantir noted several multimillion-dollar deals in the quarter, including one with a large healthcare company and another with a global bank. Palantir is offering more than just software. It is building relationships as it works with major corporations to tailor its solutions to their needs, and those needs are very complicated. Nowhere are Palantir's capabilities better illustrated than in its work with the U.S. military. Palantir's software is trusted for executing special forces and other battlefield operations, where it analyzes information in real-time to facilitate fast decision-making. The company's U.S. government revenue increased 45% year over year, driven by new deals with the Department of Defense. Internationally, it closed a deal to provide the Palantir Maven Smart System to advance NATO's military defenses. Palantir's opportunity is well understood on Wall Street. But even using Wall Street's consensus revenue estimates, it's very difficult to justify the valuation required to send the stock to the analyst's $1 trillion market cap projection. Palantir's trailing-12-month revenue is $3.1 billion, which puts the stock's current price-to-revenue multiple at 87. The consensus analyst estimate has revenue reaching $6.5 billion in 2027, but that still leaves the stock trading at an expensive forward revenue multiple of 40. For perspective, the stock of AI chip leader Nvidia trades at 21 times revenue. Another top player in AI software, ServiceNow, trades at 18 times revenue. There are plenty of fast-growing AI companies out there that investors can buy at lower valuations. For Palantir stock to hit $1 trillion in market value, investors would have to bid the stock up to an even higher valuation of 153 times 2027 revenue estimates. One way investors could perhaps justify this is if Palantir's revenue started doubling year over year. The problem with that is the company's own guidance calls for revenue to increase just 36% for 2025. That may not be enough growth to satisfy the stock's price tag. At these valuation levels, I would consider investing in other top AI stocks. Any slip in management's execution or other headwinds to growth could send the stock plummeting from these highs.

Meet the Monster Stock That Continues to Crush the Market | The Motley Fool

Many of today's tech stocks -- including the Magnificent Seven that led last year's stock market gains -- have suffered in recent times. Even the most established of tech players such as Nvidia or Apple, for example, have seen their shares stumble. Why? Investors have worried that President Donald Trump's import tariff plan would hurt growth -- higher prices could result in lower spending by U.S. consumers and companies. Yet, against this backdrop of uncertainty, one tech company in particular stands out. This software player has seen its shares soar 1,400% over the past three years, resulting in a valuation that many analysts have said isn't sustainable. For months, they've predicted the stock was set to pull back. But so far any declines haven't lasted. In fact, this supercharged growth stock has climbed 55% so far this year. Let's meet the monster stock that continues to crush the market. This red-hot player is Palantir Technologies (PLTR -1.49%), and its recent news shows us why investors are so excited about the stock. Yet again, Palantir reported quarterly double-digit revenue growth, solid profitability, and boosted guidance for the full year. But before we get to that, let's look at Palantir's path so far -- and how it rushed from investors' radar screens into their portfolios. Palantir has been around for more than 20 years, and in its earlier days it mainly was known for serving the government with its data gathering and analyses platforms. The company, over this time period, built out its capabilities, then launched an initial public offering five years ago. Though the stock initially took off, it slumped and wallowed in the doldrums a few years later. But Palantir's fortunes changed with the artificial intelligence (AI) boom and the launch two years ago of its AI-powered product, simply called its Artificial Intelligence Platform, or AIP. This system uses AI throughout the process of aggregating a customer's disparate data and helping that customer put it to work -- the results are often striking, changing the game for that particular user. AIP is helping customers save time and money, make better decisions, and develop new strategies and systems. And to spur growth of this new system, Palantir launched bootcamps to offer customers an opportunity to test AIP and see how it could work for them. This has proven to be a fantastic strategy, and thanks to this, the quality of AIP, and the fact that the AI boom is going strong, Palantir's commercial revenue took off. So now, Palantir continues to see growth from its government customers, and commercial revenue is contributing significantly too. All of this, unfolding quarter after quarter, has stirred up investor excitement and helped the stock to skyrocket. In the most recent quarter, the first quarter of its fiscal-year 2025, Palantir delivered a fresh dose of good news: The U.S. government and commercial businesses each reported a double-digit increase in revenue. Deal value also is climbing, with Palantir saying it closed 139 deals in the period that were worth at least $1 million. That's up from 104 deals of that value just two quarters ago. Importantly, Palantir is balancing this growth with profitability, and this is reflected in its Rule of 40 score of 83%. At 40%, a software company is viewed as having a good growth/profit balance, so clearly Palantir is excelling in this area. Finally, Palantir finished off the report by lifting its total revenue, U.S. commercial revenue, adjusted income from operations and adjusted free cash flow guidance levels for the full year. Now, let's consider stock price. This has been the sticking point for potential investors -- though Palantir's outlook is incredibly bright, the stock is trading at a very high valuation: 200x forward earnings estimates. And analysts continue to predict a decline is near. Wall Street's average price target calls for the stock to fall about 20% in the coming 12 months. What does this mean for you as an investor? If you're a value investor, you probably won't want to pick up Palantir shares right now as they're not the right fit for a value strategy. But if you're a growth investor and you aim to hold your investment for a number of years, you still may benefit from a Palantir buy today -- even at today's price. Though the stock could indeed stumble and go through a period of stagnation, this supercharged growth company has what it takes to power its share price higher over the long term.

This Artificial Intelligence (AI) Software Stock -- a 1,090% Gainer Since Its IPO -- Could Soar Another 285%, According to Dan Ives. Is It Time to Buy Like There's No Tomorrow? | The Motley Fool

Palantir Technologies stock has risen exponentially over the last few years thanks to soaring demand for its AI software. Artificial intelligence (AI) is redefining how businesses across every major sector are operating. From enhanced analytics, automating mundane tasks in the workforce, and even building self-driving cars, it seems like AI is extending its influence across the entire economy. One company that has benefited greatly from AI is Palantir Technologies (PLTR -1.49%). Sure, demand for AI-powered software services has been a bellwether for Palantir over the last couple of years. At a deeper level, though, AI has essentially transformed Palantir's entire operation. For most of its history, skeptics on Wall Street viewed Palantir as no more than a glorified consulting business working closely with the Department of Defense (DOD). While much of Palantir's business still revolves around government contracts, rising interest in AI has fueled a new wave of potential for the company -- particularly in the private sector. Since its initial public offering (IPO) in 2020, Palantir's shares have gained about 1,090% as of this writing. Notably, the entirety of these gains occurred after April 2023 when Palantir released its latest software suite, the Artificial Intelligence Platform (AIP). Yet, even with such a parabolic rise over the last couple of years, Wedbush Securities technology analyst Dan Ives suggests Palantir stock could still soar another 285% over the next two or three years, bringing the company into the coveted trillion-dollar club. Let's take a look at Palantir's operating results and valuation trends to assess the stock's ability to sustain its current momentum. Palantir has relied heavily on deal flow from the DOD and adjacent government agencies for much of its 20-year history. While there are big bucks to be made in defense contracting, public sector business tends to be lumpy. The unreliable nature of these deals brings a level of uncertainty as it relates to future growth -- and Wall Street loathes businesses whose growth prospects look unreliable. In order to win over investor confidence, Palantir needed to show that its software platforms could win adoption from commercial customers, too. Thankfully, this is where AI comes into the spotlight. In the table below, I've outlined Palantir's customer breakdown and commercial account growth over the last several years. Data Source: Investor Relations. *Customer type breakdown for the trailing-12-month period. In just four years, Palantir's customer base has shifted from less than two-thirds in the commercial sector to more than 80%. While it may look like the company's commercial business growth is slowing, don't let the figures above fool you. Back in 2021, Palantir only had 237 customers in total. As of the end of the first quarter of 2025, the company boasted 769 customers. Not only has Palantir accelerated its private sector penetration since the launch of AIP, but the company is also signing more meaningful deals, underscored by consistently rising revenue and widening profit margins. Palantir's dominance in the software realm over the last couple of years, coupled with a bullish overall sentiment around the AI opportunity, explains the stock's incredible rise. However, smart investors understand that a stock cannot climb forever. Immediately following the company's Q1 earnings report on May 5, Palantir stock plummeted. This wasn't because the earnings results were poor -- in fact, Palantir knocked it out of the park. Even so, the average consensus price target among analysts covering Palantir is about $94, suggesting about 21% downside as of May 8. Investors may simply be waking up to the fact that Palantir's valuation has expanded beyond levels that are congruent with the company's actual growth. When AIP launched in April 2023, Palantir's price-to-sales (P/S) ratio was about 8. Since then, its P/S valuation has expanded more than elevenfold in just two years. Palantir is one of the priciest stocks in the software space today, and history suggests that shares are due for a pullback. Back in the late 1990s, when internet stocks were experiencing their own moment of euphoria, companies such as Microsoft, Amazon, and Cisco topped out at P/S multiples between 30 and 40. This was prior to the dot-com bubble exploding, which saw many high-growth stocks crater in value. Given that Palantir's current P/S is between two and three times more than the largest and most influential technology businesses during the peak of the dot-com era, investors should prepare for some valuation compression in the near term. Valuation multiples generally normalize over the long term. Another way of looking at this dynamic is that as companies begin to scale and generate more profits, investors begin to value these businesses based on earnings and less so on sales. Today, Amazon, Cisco, and Microsoft aren't generally analyzed through the lens of the P/S ratio. Rather, most investors look at these businesses on a price-to-earnings (P/E) or price-to-free-cash-flow (P/FCF) basis. So, even though these companies are trading for much lower P/S ratios than they were many years ago, that doesn't mean shareholder value wasn't created over the last 20 years. Amazon and Microsoft, in particular, have evolved into two of the most valuable companies in the world as measured by market cap. Even though Palantir's valuation multiples will likely compress over the next couple of years, that doesn't necessarily mean the company won't ever become a trillion-dollar stock. That said, it probably won't happen in the next two or three years as Ives forecasts. Instead of focusing on the next two or three years, investors should think longer term. The most prudent strategy regarding an investment in Palantir is to buy the stock at different price points, take advantage of dips, and prepare to hold onto your shares for many years.

Palantir sales forecast falls short of Wall Street's hopes

The company described rising demand for artificial intelligence software as a "ravenous whirlwind," and bumped its 2025 revenue forecast to about US$3.9 billion from about $3.75 billion, in a statement on Monday. That represents growth of 36 per cent from a year ago. Denver-based Palantir, co-founded by billionaire Peter Thiel, is best known for its work with U.S. military and intelligence agencies, while also selling its data analysis tools to governments and commercial customers. The company has recently ridden a wave of AI enthusiasm, sending its stock soaring -- and worrying some investors. Recently, shares were trading at at more than 200 times estimated earnings, making it the priciest in the Nasdaq 100 Index by this metric. Palantir shares had closed at $123.77 in New York on Monday. The stock had risen about 64 per cent this year. The company's growth was strong in the U.S., but tepid enthusiasm in the rest of the world -- which constitutes less than one-third of Palantir's business -- concerned some analysts. "Even with all the good news, it just wasn't enough to sustain the valuation going forward," said Bloomberg Intelligence analyst Mandeep Singh. "There wasn't any clarity around new drivers" of business. In his letter to shareholders, Chief Executive Officer Alex Karp said that the company's growth has outpaced expectations. "This is a level of surging and ferocious growth that would be spectacular for a company a 10th of our size," he wrote. "At this scale, however, our ascent is, we believe, unparalleled." The company's revenue for the quarter jumped 39 per cent to $884 million, exceeding analysts' average estimate of $863 million, according to data compile by Bloomberg. Profit, excluding some items, was 13 cents a share, in line with estimates. In the U.S., sales to commercial customers grew 71 per cent in the quarter, to $255 million. Meanwhile, sales to the U.S. government grew 45 per cent to $373 million in the period ended March 31, as it notched new deals amid a broader shakeup in government spending. Analysts, on average, estimated $358 million. In a call with analysts on Monday, Chief Technology Officer Shyam Sankar said the U.S. military had doubled the use of the Maven AI system, and Palantir added NATO as a new customer. Like Karp, Sankar has pushed to build up the emerging defense technology industry, and the company has stressed the importance of American manufacturing and industrial capabilities in recent months. "The reindustrialization of America is happening in our software," Karp said. In an interview with Bloomberg, Karp said he supports U.S. President Donald Trump's executive order to reform defense spending procurement, calling the prioritization of commercial products "one of the most important things you can do" to get the best technology at the best price to war fighters. Though it sells software to a wide swathe of customers, Palantir doesn't have a traditional sales force -- relying instead on in-person events called bootcamps, featuring engineers working with would-be customers using the technology. The company said it closed 139 deals of at least $1 million, 51 deals of at least $5 million and 31 deals of at least $10 million during the first quarter.

Palantir Reports Q1 2025 Revenue Growth of 39% Y/Y, U.S. Revenue Growth of 55% Y/Y; Raises FY 2025 Revenue Guidance to 36% Y/Y Growth and U.S. Comm Revenue Guidance to 68% Y/Y, Crushing Consensus Expe By Investing.com

DENVER--(BUSINESS WIRE)--Palantir Technologies Inc. (NASDAQ:PLTR) today announced financial results for the first quarter ended March 31, 2025. Our Rule of 40 score increased to 83% in the last quarter, once again breaking the metric. We are in the middle of a tectonic shift in the adoption of our software, particularly in the U.S. where our revenue soared 55% year-over-year, while our U.S. commercial revenue expanded 71% year-over-year in the first quarter to surpass a one-billion-dollar annual run rate, said Alexander C. Karp, co-founder and chief executive officer of Palantir Technologies. We are delivering the operating system for the modern enterprise in the era of AI. Consequently, we are raising our full-year guidance for total revenue growth to 36% and our guidance for U.S. commercial revenue growth to 68%. Q1 2025 Highlights For full year 2025: CEO Letter Palantir CEO Alex Karp's quarterly letter is available through Palantir's website at https://www.palantir.com/newsroom/letters. Earnings Webcast A live public webcast will be held at 3:00 PM MT / 5:00 PM ET today to discuss the results for our first quarter ended March 31, 2025 and financial outlook. The webcast can be accessed by registering online at https://palantir.events/palantirearnings-q12025. A replay of the webcast will be available at https://investors.palantir.com following the event. An investor presentation, including supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, will be available through Palantir's Investor Relations website at https://investors.palantir.com. Forward-Looking Statements This press release and statements on our earnings webcast contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook, product development and related timing, distribution, and pricing, expected benefits of and applications for our software platforms, business strategy, and plans (including strategy and plans relating to our Artificial Intelligence Platform (AIP), sales and marketing efforts, sales force, partnerships, and customers), investments in our business, market trends and market size, opportunities (including growth opportunities), our expectations regarding our existing and potential investments in, and commercial contracts with, various entities, our expectations regarding macroeconomic events, our expectations regarding our share repurchase program, and positioning. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts, and projections as well as the beliefs and assumptions of management. Words such as guidance, expect, anticipate, should, believe, hope, target, project, plan, goals, estimate, potential, predict, may, will, might, could, intend, shall, and variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to risks detailed in our filings with the Securities and Exchange Commission (the SEC), including in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and other filings and reports that we may file from time to time with the SEC, including our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025. In particular, the following factors, among others, could cause our results to differ materially from those expressed or implied by such forward-looking statements: our ability to successfully execute our business and growth strategy; the sufficiency of our available funds to meet our liquidity needs; the demand for our platforms, product offerings, and services in general; our ability to increase our number of new customers and revenue generated from customers; our ability to realize some or all of the total contract value of customer contracts as revenue, including any contractual options available to customers or contractual periods that are subject to termination for convenience provisions; our long and unpredictable sales cycle; our ability to successfully execute our channel sales and other strategic initiatives with third parties; our ability to retain and expand our customer base; the fluctuation of our results of operations and our key business measures on a quarterly basis in future periods; the seasonality of our business; the implementation process for our platforms, which may be complex and lengthy; our ability to successfully develop and deploy new technologies to address the needs of our existing or prospective customers; our ability to make our platforms and product offerings easier to install, consume, and use; our ability to maintain and enhance our brand and reputation; our ability to maintain and enhance our culture as our business grows and as we pursue our business and financial goals; news or social media coverage about us or our leadership, including but not limited to coverage that presents, or relies on, inaccurate, misleading, incomplete, or otherwise damaging information; the impact of recent or future global macroeconomic and geopolitical events, such as the ongoing Russia-Ukraine, and Israel and broader Middle East conflicts, heightened interest rates, monetary policy changes, foreign currency fluctuations, or the imposition of tariffs or other impacts on trade relations on the business and operations of our company or of our existing or prospective customers and partners; issues raised by the use of artificial intelligence in our platforms; and any breach or access to our or customer or third-party data. The forward-looking statements included in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments will cause our views to change. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release. Past performance is not necessarily indicative of future results. Additional Definitions For the purpose of this press release, our earnings webcast, and our CEO's letter: Non-GAAP Financial Measures This press release and the accompanying tables, as well as our earnings webcast, and our CEO's letter, contain the non-GAAP financial measures adjusted income from operations, which excludes stock-based compensation and related employer payroll taxes; adjusted operating margin; adjusted free cash flow; adjusted free cash flow margin; adjusted earnings before interest, taxes, depreciation, and amortization (adjusted EBITDA); adjusted EBITDA margin; adjusted net income attributable to common stockholders; and adjusted EPS, diluted. We believe these non-GAAP financial measures and other metrics described in this press release help us evaluate our business, identify trends affecting Palantir's business, formulate business plans and financial projections, and make strategic decisions. We exclude stock-based compensation, which is a non-cash expense, from these non-GAAP financial measures because we believe that excluding this item provides meaningful supplemental information regarding operational performance and provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team. We exclude employer payroll taxes related to stock-based compensation as it is difficult to predict and outside of Palantir's control. Our definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Further, these metrics have certain limitations as they do not include the impact of certain expenses that are reflected in our consolidated statements of operations. For example, adjusted free cash flow does not reflect our future contractual commitments or the total increase or decrease in our cash balances for a given period. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP. We compensate for these limitations by providing a reconciliation of each of these non-GAAP measures to the most comparable GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measure. A reconciliation table of the most comparable GAAP financial measure to each non-GAAP financial measure used in this press release is included at the end of this release. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, reconciling items that may be incurred in the future, such as stock-based compensation and related employer payroll taxes, the effect of which may be significant. Available Information Palantir uses its Investor Relations website at https://investors.palantir.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor Palantir's Investor Relations website, in addition to following our press releases, SEC filings, public conference calls, and webcasts. About Palantir Technologies Inc. Foundational software of tomorrow. Delivered today. Additional information is available at https://www.palantir.com. View source version on businesswire.com: https://www.businesswire.com/news/home/20250504446513/en/

Palantir Q1 2025 slides: Revenue jumps 39% amid AI-driven expansion By Investing.com

Palantir Technologies Inc . (NYSE:NASDAQ:PLTR) reported strong first-quarter 2025 results on Monday, with total revenue increasing 39% year-over-year to $884 million, driven by accelerating growth in its U.S. business and continued AI adoption across industries. Despite the impressive results, shares fell approximately 8.75% in after-hours trading. Quarterly Performance Highlights Palantir's first quarter demonstrated robust growth across key metrics, with the company's U.S. business leading the charge. Total revenue reached $884 million, representing a 39% year-over-year increase and a 7% sequential improvement from the previous quarter. As shown in the following comprehensive overview of the quarter's performance: The company reported adjusted operating income of $391 million, representing a 44% margin, while adjusted free cash flow reached $370 million with a 42% margin. Palantir closed 139 deals of at least $1 million during the quarter, including 51 deals of at least $5 million and 31 deals of at least $10 million. On a GAAP basis, the company reported net income of $214 million, or $0.08 per share, compared to $105.5 million in the same quarter last year. Adjusted earnings per share came in at $0.13. U.S. Business Acceleration The standout performance came from Palantir's U.S. operations, which grew 55% year-over-year and 13% quarter-over-quarter to $628 million. This growth was fueled by exceptional performance in both the commercial and government sectors. The following chart illustrates the acceleration in Palantir's U.S. commercial business: U.S. commercial revenue surged 71% year-over-year and 19% quarter-over-quarter to $255 million. The company reported its highest-ever quarter of U.S. commercial total contract value at $810 million, representing a 183% year-over-year increase. U.S. commercial remaining deal value grew 127% year-over-year and 30% quarter-over-quarter to $2.3 billion. The U.S. government sector also showed strong performance, as illustrated in the following breakdown of revenue by segment: U.S. government revenue increased 45% year-over-year and 9% quarter-over-quarter to $373 million, reflecting Palantir's continued success in securing and expanding government contracts. The company's overall revenue growth demonstrates the strong momentum across its business: Customer Growth and Retention Palantir continued to expand its customer base, particularly in the commercial sector. Total customer count reached 769, representing a 39% year-over-year increase and an 8% quarter-over-quarter improvement. The company's U.S. commercial customer count showed particularly strong growth, as illustrated in the following chart: U.S. commercial customer count grew to 432, up 65% year-over-year and 13% quarter-over-quarter, highlighting Palantir's success in penetrating the commercial market with its AI and data analytics solutions. Financial Strength and Profitability Palantir's profitability metrics continued to improve, with the company achieving a Rule of 40 score of 83% in Q1 2025, up from 57% in Q1 2024. The Rule of 40 is a performance metric that combines revenue growth rate and profit margin. The following chart shows the consistent improvement in Palantir's Rule of 40 score over time: The company's adjusted operating income has also shown consistent growth, reaching $391 million in Q1 2025, up from $226 million in Q1 2024: Palantir ended the quarter with $5.4 billion in cash, cash equivalents, and U.S. Treasury securities, with no debt, providing ample resources for continued investment and expansion. Strategic Initiatives and Partnerships Palantir highlighted several strategic initiatives and partnerships that demonstrate the company's expanding impact across industries. The company's AI-powered solutions are being deployed to solve high-stakes problems across various sectors. As shown in the following slide highlighting Palantir's impact across industries: Key partnerships include R1 RCM (NASDAQ:RCM), which is partnering with Palantir to launch an advanced AI lab to transform healthcare workflows and potentially improve unit economics by up to 50%. Citi is leveraging Palantir's technology to improve client experience in its Wealth division, while AIG (NYSE:AIG) expects its adoption of an AI-powered underwriting solution leveraging Palantir's AIP to double its 5-year revenue CAGR from 10% to 20%. The company also announced a partnership with Archer Aviation on AI development in next-generation aviation and highlighted the success of its Warp Speed platform in powering the re-industrialization of America through accelerating on-shore manufacturing capabilities. Guidance and Outlook Palantir provided guidance for both the second quarter and full year 2025, projecting continued strong growth: Market Response Despite the strong results and guidance, Palantir's stock fell approximately 8.75% in after-hours trading to $112.94, suggesting that market expectations may have been even higher or that investors were looking for more aggressive guidance. The stock had closed the regular trading session at $124.28, down 0.3% for the day. The decline comes after a significant run-up in Palantir's stock price over the past year, with the shares trading near their 52-week high of $125.41 prior to the earnings release. The stock's 52-week low stands at $20.50, highlighting the substantial appreciation Palantir has experienced over the past year. Palantir's continued focus on AI-driven solutions and its strong performance in the U.S. market, particularly in the commercial sector, position the company for continued growth as organizations increasingly adopt AI technologies to transform their operations and decision-making processes. Full presentation: