Palantir's Stock Soars Amid Expanded Government Contracts and AI Advancements

Palantir defies tech gloom as Trump momentum powers stellar share gains

June 3 (Reuters) - Palantir Technologies (PLTR.O), opens new tab has succeeded where most tech stocks have struggled this year: staying hot in a cooling market. The company's military-grade AI tools along with its deep defense ties and high-level government connections at a time when the U.S. is boosting spending on defense software have helped investors raise the bets on the stock. It has surged more than 70% this year and is the S&P 500's second-best performer - a standout in an otherwise sluggish tech market roiled by investor worries over U.S. tariffs and economic uncertainty. Palantir co-founder Peter Thiel was an early backer of President Donald Trump and has close ties with key Washington lawmakers, including Vice President JD Vance, whom he supported in a 2022 U.S. Senate race. "The relationships that Palantir's founders...have with senior members of the Trump administration are helpful for business," D.A. Davidson analyst Gil Luria said. Palantir in April won a $30 million contract, opens new tab from the U.S. Immigration and Customs Enforcement to develop an operating system, opens new tab that identifies undocumented immigrants and tracks self-deportations, its largest single award from the agency among 46 federal contract actions since 2011. "They probably benefit a little bit more with Trump because of the impetus on security, border and immigration," said Francisco Bido, senior portfolio manager at Palantir investor F/m Investments. "They're going to get a lot of work out of that." Palantir, however, downplayed the impact of political goodwill. "The politics around it change, so it gets increased visibility but we've been working with ICE since 2010," the company's communications head, Lisa Gordon, told Reuters. Founded in 2003 and listed in 2020, Palantir, which was initially backed by the CIA, has drawn investor interest in its growing AI platform that allows companies to simulate AI-related scenarios, debug code and test large language models. "No other large software company can currently combine that level of growth with high profitability and unique offering," Luria said. But its growth has largely been driven by U.S. government contracts which made up for more than 42% of its revenue in the March quarter. Sales to U.S. businesses accounted for 29%, while commercial sales outside the U.S. were down 5% from a year ago - a slide that some analysts point to Palantir's polarizing political profile and America-first stance. The rally in its stock builds on a 12-fold surge over the past two years that outpaced gains in red-hot companies such as Nvidia (NVDA.O), opens new tab and brings with it a valuation premium. Palantir trades at a forward price-to-earnings ratio of 200.47, compared with Nvidia's 27.96. Reporting by Arsheeya Bajwa in Bengaluru; Editing by Aditya Soni and Arun Koyyur Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence

Palantir Is Surging. The Stock Leads Nasdaq Gains So Far This Year as Federal Work Expands

With Friday's gains, the stock has surged nearly 70% this year and leads Nasdaq 100 companies so far in 2025. Palantir (PLTR) shares climbed Friday amid optimism about the AI darling's expanding work for the U.S. government. The stock was up over 5% in recent trading, making it one of the day's best-performing stocks in the S&P 500. The stock has surged 70% this year, leading the Nasdaq 100's constituents so far in 2025. Palantir's gains have come as its work for the federal government has grown in recent months. The government has integrated a Palantir product called Foundry into at least four agencies, including the Department of Homeland Security and the Health and Human Services Department, The New York Times reported Friday. Officials at the Social Security Administration and Internal Revenue Service have also had discussions with Palantir about buying its technology, the report said. Palantir did not immediately respond to a request for comment, nor did the SSA or IRS. Earlier this week, Fannie Mae, the government-sponsored mortgage backer, announced the launch of an AI-powered crime detection unit in partnership with Palantir. Fannie Mae claimed the unit would help prevent millions of dollars in fraud losses by helping detect fraud "with speed and precision never before seen in the U.S. housing market."

Palantir stock surges on new government contracts, but are big investors quietly cashing out amid rising valuation risks?

Palantir stock is grabbing attention after a sharp jump driven by big U.S. government contracts and a solid Q1 earnings beat. With revenue hitting $884 million and net income more than doubling to $214 million, investors are taking notice. But as the Palantir stock price rises, so do concerns about its valuation and reliance on federal deals. While commercial growth is promising, some Wall Street players are quietly pulling back. Is Palantir's future growth strong enough to justify its premium pricing? This story dives into the numbers, the risks, and whether Palantir stock is still a smart buy in 2025.Palantir stock jumps after government contracts, but is the price getting too high?- Palantir stock is making headlines again after a strong rally sparked by several new U.S. government deals. The data analytics and AI software firm beat Wall Street expectations in its Q1 2025 earnings, drawing fresh attention from investors. But as the price climbs, many are starting to ask: is Palantir stock becoming too expensive compared to its actual growth? The main driver behind the recent jump in Palantir stock is a batch of big government contracts. In the first quarter of 2025, the company reported revenue of $884 million, up 39% year-over-year, according to Financial Times. That number blew past Wall Street estimates. Palantir's net income came in at $214 million, which is more than double what it reported a year ago -- and about 20% above analyst forecasts. These results were largely powered by its deepening work with U.S. government agencies. Its signature Foundry software is now being used by the Department of Homeland Security, Department of Health and Human Services, and reportedly under discussion with both the IRS and Social Security Administration. On the defense front, Palantir signed a $178 million contract with the U.S. Army and another $30 million deal with ICE. Overall, revenue from U.S. government contracts reached $373 million for Q1 -- a 45% increase from the same time last year. Yes, and faster than some expected. While Palantir has long relied on government deals, its U.S. commercial revenue rose 71% year-over-year in Q1 to $255 million. That's a big deal for the company's long-term prospects. Palantir is seeing growing demand from industries like healthcare, finance, manufacturing, and energy, where companies are starting to adopt its AI-driven platforms. Still, the majority of Palantir's earnings -- about 72% last quarter -- came from public sector work. That leaves investors wondering: can the company build a more balanced revenue stream? The jump in commercial growth is a strong sign, but it's not yet big enough to offset the risk of losing or delaying government contracts. Despite solid earnings, many experts are cautious about Palantir's current valuation. The stock is trading at roughly 18.5 times projected 2025 revenue, and more than 50 times its unlevered free cash flow. Those are high numbers, especially in a tech market still adjusting to higher interest rates and tighter spending. Some analysts argue that this valuation only makes sense if Palantir keeps delivering strong results quarter after quarter -- without missing a beat. That's a tough ask, especially since large government contracts don't always follow a consistent schedule. Revenue can look great one quarter and fall flat the next. Another concern is political risk. For example, the Trump administration's proposed Department of Government Efficiency (DOGE) aims to cut federal spending. If implemented, such moves could limit how much agencies spend on tech tools like Palantir's software. While Palantir stock is rising, some major investors appear to be stepping back. According to TipRanks, several institutional firms have been selling off shares and moving money into other AI-related stocks, including Taiwan Semiconductor (TSMC). This shift doesn't necessarily mean investors have lost faith in Palantir's future. But it suggests that some are worried the stock price is getting too far ahead of its fundamentals. With a price-to-sales ratio around 19.5x forward revenue, any slowdown in growth or missed contract opportunity could quickly trigger a sell-off. It depends on your investment style and risk tolerance. Palantir is clearly a key player in AI and defense-related analytics. It's posting six consecutive quarters of GAAP profitability, expanding in the commercial market, and still landing huge federal contracts. But the stock is also priced high. It has gained nearly 30% year-to-date, which means there's less room for error. If earnings disappoint or contract wins slow, the price could fall just as fast as it rose. For long-term investors who believe in Palantir's tech, its deep roots in U.S. defense, and the growth of AI in enterprise systems, the company may still be a good pick. But it's not a low-risk play -- especially with budget talks and political shifts looming in Washington. Palantir stock is hot again -- and for good reason. Strong earnings, major government contracts, and fast growth in the commercial sector are giving the company real momentum in 2025. But at the same time, the stock's high price tag is raising eyebrows across Wall Street. Investors need to keep a close eye on a few key factors: future contract wins, profit margins, and how quickly Palantir can grow its non-government business. If the company keeps executing, there's a path forward. But if growth slows or politics shift, that high valuation could become a problem. For now, Palantir stock is a mix of promise and caution -- a fast-rising tech firm with powerful government ties, but also one that faces real questions about consistency and cost Q1: Why is Palantir stock going up in 2025? Palantir stock is rising due to strong Q1 earnings and major U.S. government contracts. Q2: Is Palantir stock overvalued right now? Yes, many analysts believe Palantir stock may be too expensive based on its current growth.

Palantir Stock Gains As Trump Expands Company's Role in US Government Agencies - Palantir Technologies (NASDAQ:PLTR)

Palantir Technologies PLTR stock surged on Friday amid reports indicating the Trump administration has expanded the company's work across the federal government in recent months. Palantir is also discussing buying its technology with the Social Security Administration and the Internal Revenue Service (IRS), the New York Times reported on Friday, citing six government officials and Palantir employees familiar with the matter. According to the report, Palantir has secured more than $113 million in contracts (new and additional funds from existing) since Trump took office. This does not include the $795 million DoD contract awarfed last week. Also Read: Tech Analyst Expects Palantir Stock To Rise Above $400 As AI Revolution Kicks Into Gear In March, President Trump signed an executive order directing federal agencies to enhance data sharing, effectively introducing Palantir's key platform, Foundry, to at least four agencies, including DHS and the Department of Health and Human Services. The Trump administration has also pursued access to various data points on citizens and others through government databases and bank accounts, the report said. Palantir's government contracts span the Defense Department and Centers for Disease Control and Prevention. Palantir stock has 75% year-to-date and 504% in the last 12 months. Palantir is in discussions for a permanent contract with the IRS after joining them in April to organize data, the New York Times cited government officials familiar with the matter. Palantir also recently began helping Immigration and Customs Enforcement's enforcement and removal operations team under a $30 million deal they inked in April, the New York Times cited Palantir employees and DHS officials familiar with the matter. Palantir also discussed organizing the Social Security Administration and the Department of Education's data, the New York Times reported, citing Palantir employees and officials in those agencies. Price Action: PLTR stock is up 3.51% at $126.80 at last check Friday. Read Next: Alibaba And Baidu Turn To Chinese AI Chips As US Sanctions Squeeze Nvidia Supply Photo via Shutterstock PLTRPalantir Technologies Inc$126.753.62%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum99.27Growth97.43QualityNot AvailableValue2.64Price TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs