- Palantir stock surged 27% after strong earnings and 2025 guidance.
- Palantir’s revenue growth is partly driven by its contracts with the US government.
- Wall Street analysts praised Palantir’s AI growth strategy, raising price targets for the stock.
DeepSeek drama may have shaken some investors’ faith in the artificial intelligence trade, but the momentum hasn’t slowed for Palantir.
The data analytics company saw its stock soar 27% on Tuesday after it reported blockbuster earnings results and offered strong guidance for 2025.
The big gains come after Palantir stock soared 341% in 2024. Year-to-date, Palantir stock is up 41%.
In the fourth quarter, Palantir reported $827.5 million in revenue, beating analyst estimates by about $46 million and representing 36% year-over-year growth. Adjusted earnings per share of $0.14 beat analyst estimates by $0.03.
For 2025, Palantir projected $3.75 billion in revenue and $1.56 billion in adjusted operating income, well ahead of average analyst expectations of $3.54 billion and $1.37 billion, respectively.
“We are still in the earliest stages, the beginning of the first act, of a revolution that will play out over years and decades,” Palantir CEO Alex Karp wrote in a letter to shareholders. “We have been preparing for this moment diligently for more than twenty years.”
Much of Palantir’s success comes from its business with the US government. The Department of Defense is its biggest customer, making up 41% of its fourth-quarter revenue.
The stock was mostly shielded last week when China’s DeepSeek AI model sparked sharp losses for AI hardware companies like Nvidia and Broadcom.
Palantir CTO Shyam Sankar said the “real lesson” from DeepSeek is that “we are at war with China.”
“We are in an AI arms race,” Sankar said on the earnings call. “We have to realize that the AI race is winner-take-all and it’s going to be a whole of nation effort that extends well beyond the DoD in order for us as a nation to win.”
Another topic on the company’s earnings call was the Department of Government Efficiency, led by Elon Musk.
Karp was excited about the prospect of working with DOGE, arguing that the company’s data analytics and insights platform should help the government achieve significant cost savings.
“We love disruption, and whatever is good for America will be good for Americans and very good for Palantir,” Karp said in response to a question about DOGE.
With a valuation of $243 billion, Palantir is now bigger than the major defense companies that service the Department of Defense, eclipsing the valuations of RTX Corp by about $70 billion and Lockheed Martin by about $135 billion.
Wall Street analysts cheered Palantir’s results.
Wedbush analyst Dan Ives said the company is playing chess in the AI arms race while others play checkers, raising his price target to $120, about 15% higher than current levels.
“There are some transformational tech stocks that come along every decade and change the landscape,” Ives wrote in a note on Tuesday. “Palantir is one of them in our view.”
Analysts at Bank of America raised their price target to $125 and said that as the AI market becomes more crowded, Palantir’s value proposition is only becoming more pronounced.
“PLTR’s focus on operationalizing data, establishing high-fidelity digital enterprise-twins, and accelerating decision making is a winning formula. We expect further market-value being awarded to the AI value-adders vs. commodity distributors and stand firmly that PLTR will remain a value-adder,” BofA wrote in a Tuesday note.
While Palantir stock is riding high, so is its valuation. The stock trades at a forward price-to-earnings ratio of 162x, a price-to-sales ratio of 90x, and a price-to-free cash flow ratio of 243x.
