Is Palantir the Best Stock to Buy?
One of the premium AI stocks available is PLTR. After much anonymity, this stock has rocketed in the last 6 months along with the AI hype that’s driven the S&P and NASDAQ.
Of late, this stock with a hefty valuation, perhaps the most frothy of any stock on the stock market (PLTR’s price-to-earnings ratio is 429.19 😧 as of Mar 5, 2025 and is 76% above its 4-year historical average). Of late, the PLTR stock price has plummeted, casting stronger light on where this company gets its revenues. Is PLTR one of the best stocks to buy right now? Palantir just a big AI hoax, or is it positioned best to be the company that big companies will rely on to leverage and integrate AI?
Interest in Palantir is about its future and how it is positioned to benefit from the coming, expected AI technology boom. It is a key figure in government solutions and for large projects in the corporate sector. Databricks with 7x times greater marketshare, IBM and Alteryx are its major competitors. Databricks is considered a better solution for most companies, however Palantir tends to excel in highly complex data integration and security-focused scenarios with its more robust compliance features. That means, for major billion-dollar projects, Palantir will be chosen.
Who Is Palantir?
Palantir is considered a key AI company. It provides a platform that allows users to integrate and analyze large amounts of complex data from diverse sources using AI algorithms. This helps them make informed decisions in various industries, particularly within government and enterprise sectors, with its flagship product “Artificial Intelligence Platform (AIP)” being a major driver of this capability. Essentially, Palantir provides the practical application of AI for real-world decision-making rather than just developing AI models themselves.
Investing in Palantir likely is more about the state of AI and whether businesses feel it is a current priority. If the economy pushes into recession, AI will fall in priority and large-scale AI implementation budgets will shrink. And if Nvidia’s stock price is ailing, then it’s a signal that perhaps the data analytics services that Palantir offers won’t find a customer either.
However, Palantir’s Gotham application is an intelligence and defense tool used by militaries and counter-terrorism analysts. Given President Trump is strong concerned about dealing with terrorism, and in building the Stargate defense system, Gotham will be in demand. The question is about how much Trump will invest in the defense project.
Analysts give PLTR stock a hold rating, which means don’t buy or sell. It’s a waiting pattern until its true direction is revealed. Tipranks analysts offer a grim forecast of Palantir’s earning projections for 2025 an average of +20% upside.
6X Growth in 8 Months
Just last August, PLTR traded for a low $24 dollars per share before soaring to $124 in mid-February. Some investors then saw their investment grow 6X. The question, now as it sits at $80, whether it will plummet further or be ready for the next leg up, when economic issues ease.
Volatility is the name of game in the NASDAQ and S&P500 indexes, so anytime a stock dips hard, it’s likely going to rebound to create some nice profits for an investor. It’s a matter of buying low and waiting for its rapid climb. How long would you wait for a 50% to 100% gain?
This chart can give you concerns. Revenue growth year over year however was very strong at 52%. Its Q4, 2024 earnings per share growth went negative.
Here’s a look at PLTR’s Company vitals:
| PE Ratio | 423.95 |
| PEG Ratio | 3.816 |
| Price to Book Value | 37.76 |
| Price to Free Cash Flow | 172.98 |
| Price | 80.55 |
| Earnings Yield | 0.24% |
| Market Cap | 188.92B |
| PEGY Ratio | 3.816 |
| Operating PE Ratio | 635.98 |
| Normalized PE Ratio | 423.95 |
Palantir Q4 2024 Highlights
- U.S. revenue grew 52% year-over-year and 12% quarter-over-quarter to $558 million
- U.S. commercial revenue grew 64% year-over-year and 20% quarter-over-quarter to $214 million
- U.S. government revenue grew 45% year-over-year and 7% quarter-over-quarter to $343 million
- Revenue grew 36% year-over-year and 14% quarter-over-quarter to $828 million
- Palantir Technologies EPS for the quarter ending December 31, 2024 was $0.03, a 25% decline year-over-year.
- Closed 129 deals of at least $1 million, 58 deals of at least $5 million, and 32 deals of at least $10 million
- Closed a record-setting $803 million of U.S. commercial total contract value (“TCV”), up 134% year-over-year and 170% quarter-over-quarter
- U.S. commercial remaining deal value (“RDV”) of $1.79 billion, up 99% year-over-year and 47% quarter-over-quarter
- Customer count grew 43% year-over-year and 13% quarter-over-quarter
- Cash from operations of $460 million, representing a 56% margin
- Adjusted free cash flow of $517 million, representing a 63% margin
- GAAP net income of $79 million, representing a 10% margin
- $165 million of net income when excluding one-time SAR-related expenses, representing a 20% margin
- GAAP income from operations of $11 million, representing a 1% margin
- $142 million of income from operations when excluding one-time SAR-related expenses, representing a 17% margin
- Adjusted income from operations of $373 million, representing a 45% margin
- Rule of 40 score of 81%
- GAAP earnings per share (“EPS”) of $0.03
- $0.07 EPS when excluding one-time SAR-related expenses
- Adjusted EPS of $0.14
The fact is, that if the economy is threatened and big businesses can’t make decisions, there is no reason to believe companies such as Nvidia and Palantir will thrive with big earnings.
Right now, AI is receding in business and investor views, as consumer sentiment sags due to the transition into Trumponomics and his Tariff wars. All major indexes are sinking and the urgency to integrate AI is forgotten in favor of practical ways to make a buck.
Wedbush analyst Daniel Ives believes Palantir will be “a core winner in the trillions of AI spend over the next few years and get a big boost from Trump’s stargate defense initiative.
Project Stargate is being led by SoftBank, OpenAI, Oracle (ORCL) and MGX, who are the project’s initial equity funders and Arm (ARM), Microsoft (MSFT) and Nvidia (NVDA) are the technology partners.
What is Palantir Technologies?
Palantir Technologies is a public American company that specializes in big data analytics. It targets government, military defense and commercial enterprises.
Founded in 2003, it is known for its data integration and analysis software, which is used by government and commercial clients to solve complex problems. The company’s name is inspired by the “seeing stones” in J.R.R. Tolkien’s “The Lord of the Rings,” which allow characters to communicate and see events in distant places.
Services and Revenue Generation:
Palantir primarily offers two main platforms:
- Gotham: This platform is designed for government and defense clients. It integrates, manages, secures, and analyzes vast amounts of data to assist in intelligence operations, defense, and law enforcement. Gotham is used for tasks such as tracking terrorist networks, managing military operations, and analyzing cybersecurity threats.
- Foundry: This platform is tailored for commercial enterprises. Foundry allows organizations to integrate and analyze their data to improve decision-making, optimize operations, and drive innovation. It is used in industries such as healthcare, finance, manufacturing, and energy.
Palantir generates revenue through:
- Software Licenses: Clients pay for access to Palantir’s platforms, often through multi-year contracts.
- Professional Services: Palantir provides consulting and support services to help clients implement and customize their platforms.
- Cloud Services: With the shift to cloud computing, Palantir also offers cloud-based versions of its platforms, generating revenue through subscription models.
Factors Influencing Revenue:
Several factors influence Palantir’s revenue:
- The US Economy: When the US economy flags, and government spending decreases, companies become risk averse. AI adoption is a big money, big commitment activity that depends on economic strength.
- Government Contracts: A significant portion of Palantir’s revenue comes from government contracts, particularly in defense and intelligence. Changes in government spending, geopolitical events, and the competitive landscape for government contracts can impact revenue. President Trump’s Stargate defense project would provide significant revenues if Palantir is chosen as one of its key components.
- Commercial Adoption: The adoption of Palantir’s platforms by commercial enterprises is crucial for growth. Factors such as the ability to demonstrate ROI, industry trends, and competition from other data analytics providers influence this adoption.
- Product Innovation: Continuous innovation and the ability to offer new features and capabilities can drive revenue growth. Palantir’s investment in AI and machine learning is particularly important as these technologies become more integral to data analytics.
- Global Expansion: Palantir’s ability to expand its customer base internationally, especially in regions with growing demand for data analytics, can significantly impact revenue.
- Regulatory Environment: Data privacy regulations and government policies on technology exports can affect Palantir’s operations and revenue.
Outlook for Future Sales:
The outlook for Palantir’s future sales of AI services is generally positive, driven by several trends:
- Increasing Demand for Data Analytics: As organizations across industries recognize the value of data-driven decision-making, the demand for advanced analytics platforms like Palantir’s is expected to grow.
- AI and Machine Learning Integration: Palantir’s focus on integrating AI and machine learning into its platforms positions it well to capitalize on the growing adoption of these technologies. AI-driven insights are becoming increasingly important for both government and commercial clients.
- Expansion into New Markets: Palantir is actively expanding into new industries and geographic markets. For example, its entry into healthcare and life sciences has shown promise, particularly in areas like drug discovery and patient data analysis.
- Cloud Adoption: The shift towards cloud-based solutions is likely to benefit Palantir, as more clients prefer the flexibility and scalability offered by cloud platforms.
- Government and Defense Spending: Continued investment in defense and intelligence by governments, particularly in the U.S. and allied countries, is expected to sustain demand for Palantir’s Gotham platform.
Palantir’s challenges come from other data analytics providers and the demand to continuously innovate, and surmount potential regulatory hurdles. Additionally, the company’s reliance on large contracts means that the loss of a major client could significantly impact revenue.
In summary, Palantir’s future sales of AI services are likely to grow, driven by the increasing importance of data analytics, AI integration, and expansion into new markets.
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