In the whirlwind world of technology stocks, few names have sparked as much debate—and as much investor fervor—as Palantir Technologies. Since its high-profile direct listing in 2020, the company has become a lightning rod for both bullish optimism and skeptical caution. Now, as 2025 rolls on, Palantir’s financial performance, soaring valuation, and headline-grabbing insider activity have brought the company’s story to a fever pitch.
Palantir’s second quarter of 2025 was, by most conventional measures, a blowout. According to AInvest.com, the company reported revenue of $1.004 billion, marking a 48.01% increase year-over-year. Notably, U.S. government contracts made up 55% of that total, growing 53% to $426 million—a clear sign of Palantir’s deepening roots in defense and intelligence. The company’s earnings per share (EPS) landed at $0.16, beating forecasts by a robust 14.29%. Adjusted free cash flow soared to $569 million, and the company’s Rule of 40 score—a blend of growth and profitability—reached an eye-popping 94, well above the software industry’s typical 40 benchmark. That’s not just good; it’s nearly unheard of in high-growth tech.
These numbers aren’t just impressive—they’re historic for Palantir. The company crossed the $1 billion quarterly revenue threshold for the first time, with U.S. sales alone surging 68%. Its adjusted operating margin clocked in at 46%, and gross profit margin hit a hefty 80%. For 2025, Palantir’s guidance points to annual revenue between $4.142 and $4.150 billion. The after-hours market cheered, sending Palantir’s stock up 4.14% following the Q2 earnings release.
But with great growth comes great scrutiny. Palantir’s valuation is, by almost any standard, sky-high. The company’s trailing price-to-earnings (P/E) ratio sits at a staggering 526.18, with a forward P/E of 213.56. Its EV/EBITDA ratio is an eye-watering 620.32, and the price-to-sales ratio stands at 106.92. To put that in context, Salesforce’s EV/EBITDA is around 35x, while Adobe’s price-to-sales ratio is just 10x. Investors are paying dearly for each dollar of Palantir’s revenue, betting that the company will dominate the artificial intelligence and data analytics space for years to come.
Not everyone is convinced. Citigroup analyst Tyler Radke minced no words, declaring Palantir’s 70x forward revenue multiple “too rich” despite recent declines. The stock closed at $158.74 on August 22, 2025, up 1.64% on the day and up an astonishing 111.12% year-to-date. After-hours trading nudged the price even higher, to $159.68. With a market capitalization of $376 billion and an average daily trading volume of 69.37 million shares, Palantir is no longer just a niche player—it’s a market heavyweight. Yet, as Radke’s warning suggests, such a meteoric rise brings risks of its own.
Some of those risks have been highlighted by Citron Research, which recently initiated a short position, targeting a $40 fair value—74% below current levels. Citron drew unflattering comparisons to competitor Databricks, which boasts 15,000 customers to Palantir’s 849 and 50% revenue growth versus Palantir’s 45%. The implication? Palantir’s valuation may be riding a wave of hype, not hard numbers. The company’s heavy reliance on U.S. government contracts (55% of revenue) also introduces exposure to political and budgetary shifts that could quickly alter its fortunes.
Yet, not all voices are bearish. Wedbush analyst Dan Ives remains firmly in the bull camp, dubbing Palantir “the poster child of the AI revolution” and arguing that any weakness in the stock is a buying opportunity. According to Benzinga, Palantir’s momentum is in the 98th percentile, with a positive price trend across all time frames. That’s not just Wall Street cheerleading—there’s real conviction among some analysts that Palantir’s platforms, such as Gotham, Foundry, Apollo, and its AI suite, are uniquely positioned for the next wave of data-driven decision-making in both government and enterprise sectors.
Of course, the Palantir story isn’t just about numbers and analyst opinions. It’s also about the people steering the ship—and what they do with their own shares. In a move that raised more than a few eyebrows, CEO Alex Karp executed a massive $62.7 million stock sale over two days in August, selling 409,072 shares at prices between $142.46 and $157.56. According to SEC filings cited by Benzinga, these sales were automatic transactions to cover tax withholding obligations after restricted stock unit vesting. Still, Karp has now sold approximately $2 billion worth of Palantir stock over the past two years—a significant executive liquidation that can’t be ignored.
Such insider selling often spooks investors, especially when paired with mounting valuation pressure and increased short interest. But context matters: these sales were largely tied to tax obligations, not a loss of faith in the company’s prospects. Still, the optics are tricky, and for some, they add to the narrative that Palantir’s current price is unsustainable.
Jim Cramer, the outspoken host of CNBC’s Mad Money, weighed in on the debate, describing Palantir as “a talented company with a messianic leader who knows how to win big contracts.” Cramer acknowledged the difficulty of valuing the stock using traditional metrics like earnings per share, which make it look “insane.” However, he argued that when judged by the Rule of 40—a metric often favored for high-growth enterprise software companies—Palantir actually appears “incredibly cheap.” As Cramer put it, “Palantir, rational? Let’s just say there’s no method to its madness.”
Palantir’s business model is undeniably compelling. Its software platforms are designed for complexity and scale, making them indispensable to agencies like the U.S. Department of Defense and intelligence services. Its commercial business, while still smaller than its government segment, is growing rapidly and provides some diversification. The company’s ability to generate significant free cash flow and maintain a strong current ratio gives it flexibility to reinvest or weather downturns.
Yet, as AInvest.com cautions, the risks are acute. A slowdown in government spending, regulatory scrutiny, or a broader market correction could trigger a sharp re-rating. The valuation leaves little room for error, and the stock’s volatility—evidenced by its 4.14% after-hours jump post-earnings—means only those with a high risk tolerance should consider jumping in at these levels.
For now, Palantir sits at a crossroads. It’s a company with robust fundamentals and a track record of delivering on big promises, but it’s priced for perfection—and then some. As the debate rages on, one thing is clear: Palantir’s story is far from over, and the stakes have never been higher.
