After a jump of 340% in 2024, Palantir (PLTR) is a rare name from the tech sector that has continued its upward journey this year with an uptick of 51.3% on a year-to-date basis.

One of the most cited reasons for Palantir’s outperformance is its close relationship with the federal government, which produces a steady stream of revenue for Palantir. But, there is more to Palantir than just that. 

Let’s do a deep dive and find out what aids and ails the company that is set to report its Q1 earnings on May 5.

About Palantir Stock

Palantir has been around since 2003 and counts legendary investor Peter Thiel as its co-founder. The company specializes in big data analytics and artificial intelligence (AI) solutions for both government and commercial clients.

Valued at a market cap of $272 billion, PLTR stock is up a whopping 420% over the past 52 weeks. 

Can Palantir continue on its upward trajectory? It seems so, and here is why.

Palantir Is Financially Stable With Consistent Results

Palantir Technologies delivered a robust showing in its most recent quarterly update, outperforming Wall Street’s forecasts on both the top and bottom lines. Total revenue advanced 36% from the year-ago period to $828 million, underpinned by notable strength across its U.S. commercial and government divisions. The company’s U.S. commercial business posted a 64% year-over-year revenue jump to $214 million, while government-related income climbed 45% to $343 million over the same stretch.

Earnings growth was even more pronounced, with net income per share increasing 75% from the prior year to $0.14, well above the consensus estimate of $0.11. This marks the sixth straight quarter that Palantir has outperformed analysts’ earnings projections, further establishing its reputation for delivering steady profitability.

Momentum in the commercial segment was reflected in the contract value of its U.S. deals, which soared 134% compared to the prior year to reach $803 million. The firm also recorded a 43% increase in its customer base on a year-over-year basis, highlighting its ongoing success in expanding its footprint across industries.

During the fourth quarter of 2024, Palantir closed 129 contracts with a minimum value of $1 million, including 32 agreements valued north of $10 million.

For the full year ending Dec. 31, net cash provided by operating activities totaled $1.2 billion, reinforcing the company’s strong financial foundation. By year-end, Palantir had accumulated $2.1 billion in cash on its balance sheet and reported zero short-term debt obligations, providing it with a healthy buffer for future investments and initiatives.

Looking forward, the company expects 2025 revenue to land between $3.741 billion and $3.757 billion, comfortably ahead of the Street’s projection of $3.52 billion. This forward guidance suggests continued strength in demand for Palantir’s analytics platforms and AI-powered enterprise solutions.

In the short term, for Q1, Palantir is anticipated to report adjusted earnings per share of $0.13, reflecting a year-over-year increase of 65%, while total revenue is expected to grow 36% to reach approximately $862.2 million.

Primary Drivers (And Some Concerns)

Palantir’s heavy dependence on the government has also fueled criticism of the company. Skeptics say that the government’s expense reduction efforts spearheaded by Elon Musk may hit Palantir’s top line adversely. However, in an earlier piece of mine, I highlighted how “Palantir may stand to gain from the Department of Government Efficiency’s efforts to identify and reduce expenditures across federal agencies.” This is because its focus on innovative software is likely to still attract attention from federal agencies, compared to solutions from legacy defense contractors.

Further, recent developments has also bolstered the story around Palantir. NATO acquired Palantir’s AI-powered military system known as Maven Smart System, which places it in a prime position in defense while it also forged a partnership with tech titan Google (GOOGL) to bring Google Cloud to its FedStart initiative, which will further deepen its footprint in the U.S. government. Elon Musk’s SpaceX is teaming up with Palantir and drone manufacturer Anduril to bid on developing critical components of the Golden Dome project, which President Donald Trump announced to protect the U.S. against inbound missile attacks.

Meanwhile, Palantir’s AIP delivers unmatched exceptionalism for its commercial and government customers, as its AI-native control layer embeds itself across the entire operating stack of a company, takes real-time data across systems, and turns it into actual simulations across business cases. 

Elevated valuations, however, remain a concern as key metrics like forward price-earnings, price-sales, and price-cash flow ratios are substantially high at 210x, 72.5x and 165.7x compared to the sector medians of 25.2x, 2.6x, and 17.2x, respectively. This means that Palantir has to continue on an exceptional growth path to justify its punchy valuations.

Analyst Opinions on PLTR Stock 

Taking into account all these factors, analysts have deemed the stock a “Hold” with a mean target price of $84 which has already been surpassed. The high target price of $125 denotes uspide potential of about 9% from current levels. Out of 20 analysts covering the stock, three have a “Strong Buy” rating, 12 have a “Hold” rating, one has a “Moderate Sell” rating and four have a “Strong Sell” rating.