TLDR
- Palantir stock surged nearly 9% on Tuesday, approaching $300 billion market cap for first time
- Revenue growth accelerated to 39% year-over-year in Q1 2025
- Bank of America raised price target to $150, citing “outcome-focused bespoke AI-enabled products”
- U.S. commercial revenue grew 71% year-over-year, with 31 deals worth $10+ million last quarter
- Partnership with Archer Aviation announced to improve aviation systems using AI
Palantir Technologies is riding high on the AI wave, with its stock hitting record levels this week. The data analytics company saw its shares jump nearly 9% in Tuesday trading, pushing its market capitalization close to the $300 billion mark for the first time in its history.
The recent surge follows an impressive first quarter performance where revenue growth accelerated to 39% year-over-year, up from 36% in the previous quarter. This continues a multi-quarter trend of increasing growth rates that has caught investors’ attention.
Palantir’s success appears deeply tied to the artificial intelligence revolution, with the company leveraging years of AI investments to secure major deals. The results speak for themselves: 31 deals worth $10 million or more closed in the last quarter alone.
U.S. commercial revenue has become a key growth engine, jumping 71% compared to the same period last year. This segment is now driving the company’s overall acceleration.
Bank of America analysts are bullish on Palantir’s prospects. They recently raised their price target from $125 to $150 while maintaining a “Buy” rating.
The bank highlighted Palantir’s differentiation in the crowded AI market. Unlike competitors offering what BofA called “ChatGPT wrappers,” Palantir is creating custom AI-enabled products with clear outcomes for clients.
From Military to Mainstream
Palantir’s roots in government and military contracts have provided a strong foundation. The company continues to benefit from defense spending by the United States and its allies.
However, its expansion into commercial markets is where the real growth story lies. Large enterprises are increasingly adopting Palantir’s analytics solutions to handle complex data challenges.
With current annual revenue of $3.11 billion, Palantir still has substantial room to grow in the enterprise software market. The company’s technology appears to be hitting the sweet spot for organizations dealing with massive datasets that require sophisticated analysis.
Partnerships are also fueling growth. In a development that helped drive Tuesday’s stock surge, air taxi manufacturer Archer Aviation announced it’s teaming up with Palantir. The partnership will use AI to enhance various aviation systems.
Archer’s stock also responded positively to the news, rallying over 21% after the announcement.
Financial Metrics and Valuation
While revenue growth is impressive, investors are also watching Palantir’s profitability metrics. The company currently boasts a healthy 80% gross margin, though its operating margin sits at 13% for the trailing twelve months.
This gap exists because Palantir continues to invest heavily in sales, marketing, and research. As the company scales, these costs should decrease as a percentage of revenue.
Some analysts project that Palantir could eventually achieve operating margins of 35-40%, similar to mature software companies like Adobe. However, this level of profitability likely remains years away.
The valuation question looms large for potential investors. Palantir’s price-to-sales ratio has reached an eye-watering 94, far higher than typical enterprise software companies.
Such a premium valuation suggests the market has extremely high expectations for Palantir’s future growth and profitability. The stock has already delivered impressive returns, jumping nearly 70% year-to-date and 526% over the past twelve months.
Long-term investors who got in early have been handsomely rewarded. The stock has gained over 1,100% in the past five years.
Tuesday’s trading saw tech stocks broadly higher, with the Invesco QQQ Trust rising more than 1.6%. Other AI-related companies also performed well, including Nvidia, which announced a deal with Saudi Arabia’s AI startup Humain.
Palantir’s stock closed at $128.39 on Tuesday, up 8.38% for the day. The trading range spanned from $119.34 to $130.59, showing strong momentum throughout the session.
