Palantir Technologies, the data analytics software firm, is making headlines as its stock surged more than 8.5% following the release of solid earnings on May 5, 2025. The company reported first-quarter revenue of $884 million, exceeding analyst expectations of $863 million. Its earnings per share (EPS) of 13 cents was in line with forecasts, showcasing the company's strong financial footing.
In a significant move, Palantir's management raised its full-year revenue guidance for 2025 to a range of $3.89 billion to $3.902 billion. Moreover, they projected adjusted income from operations to be between $1.711 billion and $1.723 billion, while also increasing their adjusted free cash flow guidance to between $1.6 billion and $1.8 billion. "We are delivering the operating system for the modern enterprise in the era of artificial intelligence," stated CEO Alexander C. Karp, as reported by Barron's. He further emphasized their commitment to growth by raising the full-year guidance for total revenue growth to 36% and U.S. commercial revenue growth to 68%.
Analysts have responded positively to Palantir's performance. Citi analysts raised their price target on the stock to $115 from $110, maintaining a neutral rating. They noted that Palantir delivered a "strong beat/raise" and that its robust results solidify its position in the artificial intelligence sector. Similarly, Wedbush analyst Dan Ives expressed growing confidence in the stock, suggesting that Palantir is in a "prime position" for more contracts from the U.S. government, especially after successfully selling its AI-powered Maven Smart System to NATO.
On May 8, 2025, Palantir's stock jumped again, bringing its valuation to $281 billion, which placed it among the top 10 U.S. technology companies by market capitalization. This surge allowed Palantir to surpass Salesforce, which closed at $268 billion. The top of the list remains dominated by tech giants, with Microsoft leading at $3.3 trillion, followed by Apple and Nvidia.
Palantir's impressive rise comes amid a dramatic rally in its stock price, which has more than quintupled in value over the past year. The company has seen its shares jump 58% in 2025 alone, positioning it as a potential top performer in the S&P 500 for a second consecutive year. This growth stands in stark contrast to many of its tech peers, which have struggled under the weight of tariff uncertainties and fears of an economic slowdown. The Nasdaq index is down 7% this year, even after a small rebound in recent weeks.
Founded in 2003 by a group that included Peter Thiel and CEO Alex Karp, Palantir has significantly benefitted from its booming government business, which grew 45% to $373 million last quarter. This growth includes a substantial $178 million contract to develop artificial intelligence-enabled systems for the U.S. Army. In an animated shareholder letter accompanying the earnings report, Karp defended the company's controversial defense business, noting that some former critics in Silicon Valley have begun to recognize their contributions. "We note only that our commitment to building software for the U.S. military, those whom we have asked to step into harm's way, remains steadfast, when such a commitment is fashionable and convenient and when it is not," Karp wrote.
Despite Palantir's impressive stock performance and market cap growth, investors face a high price for entry. While Palantir has joined the ranks of top tech companies by market cap, it remains significantly smaller in terms of sales and profit. Salesforce, for instance, generated over ten times more revenue than Palantir in the past year and is expected to maintain that lead over the next four quarters. This disparity means that Palantir's valuation multiples are considerably higher than those of its larger-cap tech peers. Currently, Palantir trades at an astonishing 520 times trailing earnings, nearly 200 times forward earnings, and 90 times revenue.
Brent Thill, an analyst at Jefferies, has raised concerns about Palantir's valuation, describing it as "irrational." In his note dated May 6, he pointed out that among the top 10 tech companies, the average trailing price-to-earnings multiple is around 58, inflated by high multiples from companies like Tesla and Broadcom. For forward earnings, the average multiple is roughly 37.5, while the average revenue multiple stands at 10.2, with Nvidia carrying the highest premium at 22.
Following the release of its first-quarter results, Palantir shares experienced a slump of more than 12% on May 6. While the company exceeded revenue estimates, a deceleration in international commercial sales raised alarms among some investors. The heightened expectations for growth have set a high bar for the company to clear moving forward.
Karp addressed concerns about the stock in an interview with CNBC, stating, "You don't have to buy our shares. We're happy. We're going to partner with the world's best people and we're going to dominate. You can be along for the ride or you don't have to be." This assertive stance reflects Palantir's confidence in its future trajectory, despite the challenges it faces.
As Palantir continues to navigate the competitive landscape of technology and data analytics, its focus on government contracts and artificial intelligence positions it uniquely within the market. The company's bold moves and strong performance metrics suggest that it may be poised for further growth, even as analysts and investors keep a close watch on its valuation and market dynamics.