Palantir Stock Surges After Blockbuster Earnings: What's Next?

Key Points

• Palantir stock surged over 22% after the company reported blockbuster earnings that caught the eye of bulls and bears.
• The results further prove that Palantir’s ontology continues to make AI usable regardless of the LLM being used.
• Investors should avoid chasing PLTR stock, but as the company’s last earnings report showed, they may not get the deep pullback bearish analysts are projecting.  

Palantir Technologies Inc. NASDAQ: PLTR stock cracked the $100 mark as it surged over 22% in after-hours trading. The catalyst was an earnings report that can only be classified as a blockbuster. The Palantir retail investing community is loud and active. And even many of those investors were stunned at the company’s results.

Here are just some of the highlights from the report:

• Earnings per share (EPS) of 14 cents beat estimates of 11 cents.

• Quarterly revenue of $827.52 million was 36% higher year-over-year (YoY) and exceeded estimates by over $46 million.

• The company closed 129 deals worth at least $1 million, including 32 deals over $10 million.

• On a YoY basis, the company grew revenue on its commercial side by 31% and its government revenue by 40%.

• The company’s rule of 40 (revenue growth rate + profit margin) score jumped 19% to 81%.

• Ended the quarter with $5.2 billion in cash or cash equivalents and no debt.

Even Palantir critics must be impressed by the growth on both sides of its business in the United States.

Commercial revenue for the quarter was $214 million. That was 20% higher than the prior quarter and 64% higher YoY.

Palantir’s government business came in at $343 million, which was 45% YoY.

The company also raised its guidance for fiscal year 2025.

The company is now guiding to full-year revenue between $3.74 billion and $3.75 billion. At the midpoint, the company would post a 30% YoY gain.

Powering the Next Wave of AI

Palantir’s earnings report comes as investors continue to digest the impact of China’s open-source LLM, DeepSeek. Palantir co-founder and chief executive officer Dr. Alex Karp has repeatedly remarked that LLMs would become a commodity and that the real story of AI would come from software.

Karp points to DeepSeek as a reminder that companies and countries founded on “second principles” will always be able to copy other technology. That supports the LLM as a commodity argument.

That’s where the software story comes in. Enterprises are working with Palantir in an effort to unlock insights from their data.

But why Palantir? You can’t talk about the company’s software programs without bringing up the company’s proprietary ontology. As Karp said on the company’s earnings call, “...ontology makes your enterprise accessible to AI.” It’s also what makes the bullish argument that it’s hard to use conventional metrics to measure Palantir. Palantir would argue that among software-as-a-service (SaaS) companies, Palantir is not one of many; it’s one of one.

The Good and the Bad About PLTR Stock

The Palantir skeptics (and there are many) say that argument sounds suspiciously like, “this time it’s different.” They’ll be quick to point out that many companies have said that, only for investors to find out that they’re not different.

To that end, the naysayers have the law of large numbers on their side. In an investing context, this theory states that a large company that’s growing rapidly can’t maintain that torrid pace forever. Much like NVIDIA Corp. NASDAQ: NVDA and other technology stocks, many institutional investors are expecting PLTR stock to fall.

However, much like NVIDIA, Palantir is testing that theory, at least in the short term. And Palantir enthusiasts will point out that the last time the company’s stock made a move like this was after its last earnings report. At that point, the stock jumped approximately 58% from $41 to around $65. The stock had about a 10% pullback but then quickly moved to a closing high of around $82 on December 24, 2024.

Of course, that surge was likely part of the “Trump bump” that moved all stocks higher. Like many stocks, PLTR stock dropped about 20% from the end of December until mid-January.

Nevertheless, even the most committed Palantir bull has to concede that trees don’t grow to the sky forever. It’s reasonable to expect PLTR stock to give back some of the gains it made after its parabolic move after earnings. In an interview on CNBC, Dan Ives of Wedbush conceded that PLTR stock looks more like Tesla Inc. NASDAQ: TSLA than NVDA. However, he noted that analysts continue to undervalue Palantir because they can't "see AI on spreadsheets." Ives also noted that the company has achieved this spectacular growth while its direct sales force is still a work in progress. 

Although analysts have been raising their price targets, there’s still a wide gap among them. The highest target continues to come from Ives, who raised his price target on Palantir to $90. That’s more than double the consensus price of $44.61.