Palantir Technologies Inc. is making headlines after reporting impressive first-quarter earnings that exceeded analyst expectations, yet the stock has faced volatility in the market. On May 5, 2025, the company announced a revenue of $884 million for the first quarter, surpassing forecasts of $863 million. The adjusted earnings per share (EPS) also came in at 13 cents, aligning perfectly with analyst predictions.
CEO Alex Karp expressed his optimism about the company’s trajectory, stating, "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." Furthermore, he noted that U.S. commercial revenue expanded by an impressive 71% year-over-year, surpassing a one-billion-dollar annual run rate.
Following the earnings report, Palantir raised its full-year revenue guidance for 2025 to a range of $3.89 billion to $3.902 billion, along with adjusted operating income expectations between $1.711 billion and $1.723 billion. The adjusted free cash flow guidance was also increased to between $1.6 billion and $1.8 billion.
Despite the positive earnings, Palantir’s stock has been volatile, dropping more than 10% over the last two days leading up to May 8, 2025. This decline has led to CVS Health reclaiming the top spot on the S&P 500, boasting a year-to-date gain of over 48%.
Analysts have mixed feelings about Palantir’s stock. Wedbush raised its price target on the stock to $140 from $120, citing the company as a "generational tech name" with significant potential in the artificial intelligence (AI) sector. Dan Ives, an analyst at Wedbush, reiterated his Buy rating, emphasizing Palantir's strong positioning for government contracts, particularly after the successful sale of its AI-powered Maven Smart System to NATO.
Conversely, Deutsche Bank’s analyst, Brad Zelnick, maintained a Sell rating on the stock, despite raising his price target from $50 to $80. He expressed concerns about Palantir’s lofty valuation, which is currently trading at 152 times estimated 2026 earnings, the highest in the S&P 500 index. Mizuho Securities analyst Gregg Moskowitz also echoed these sentiments, warning that the stock is near all-time highs and reminiscent of levels seen before past selloffs.
As of May 8, Palantir's stock was trading at around $119, reflecting a recovery from a tumultuous start to the week. The company's stock had rebounded nearly 10% during trading on May 8, thanks to improved market sentiment and positive political signals. This recovery aligns with a broader bullish trend across equity markets, which has seen major U.S. indices post gains exceeding 1.4%.
One of the catalysts for this shift in sentiment was President Trump’s announcement that the Biden-era AI diffusion rule, which was set to restrict chip exports, would not be enforced. This decision triggered a rally in semiconductor and tech-related stocks, further energizing the market. Trump’s comments, which included a suggestion to "go out and buy stocks now," combined with positive momentum from a U.S.-UK trade deal, have contributed to the bullish price action across sectors, including Palantir.
Looking ahead, Palantir has projected revenue for the second quarter between $934 million and $938 million, slightly above the Wall Street consensus of $899 million. However, the market remains cautious, with analysts maintaining a Hold consensus rating on Palantir stock, based on three Buys, 11 Holds, and four Sells assigned in the last three months. The average price target for Palantir shares stands at $98.25, suggesting a potential downside of 11% from current levels.
In summary, while Palantir Technologies has delivered strong earnings and raised its guidance, the stock’s high valuation and market volatility have raised concerns among investors. As the company continues to navigate this complex landscape, its long-term growth story, particularly in AI and defense, remains a focal point for analysts and investors alike.
