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Should You Buy Palantir Stock After Its 57% Gain in 2025? Wall Street Has a Clear Answer for Investors.
PLTRPalantir Technologies(PLTR) The Motley Fool·2025-05-02 07:55

Core Insights - Palantir Technologies was the best performing stock in the S&P 500 in 2024, with a share price increase of 340% driven by strong demand for its artificial intelligence platform [1] - In 2025, Palantir has continued its momentum with a year-to-date return of 57%, again making it the top performer in the S&P 500 [2] - Wall Street analysts have a median target price of 96pershareforPalantir,indicatingapotentialdownsideof2096 per share for Palantir, indicating a potential downside of 20% from the current price of 120 [2] Company Overview - Palantir operates in a 100billion−plusindustry,developingdataanalyticssoftwareforbothcommercialandgovernmentsectors[4]−Itscoreproducts,GothamandFoundry,utilizemachinelearningtoanalyzecomplexdata,whileitsAIplatform,AIP,enhancestheseproductswithlargelanguagemodelsupport[4][5]−ThecompanyclaimstobetheonlysoftwareprovidercapableofoperationalizingAIeffectively,transitioningAIfromprototypetoproduction[5]FinancialPerformance−Palantirreporteda36100 billion-plus industry, developing data analytics software for both commercial and government sectors [4] - Its core products, Gotham and Foundry, utilize machine learning to analyze complex data, while its AI platform, AIP, enhances these products with large language model support [4][5] - The company claims to be the only software provider capable of operationalizing AI effectively, transitioning AI from prototype to production [5] Financial Performance - Palantir reported a 36% revenue increase to 828 million in the fourth quarter, with a 75% rise in non-GAAP net income to 0.14perdilutedshare[5]−Thenumberofcustomersgrewby430.14 per diluted share [5] - The number of customers grew by 43% to 711, and existing customers increased their spending by 20% [5] - Analysts expect Palantir's first-quarter revenue to rise by 36% to 862 million, with adjusted earnings increasing by 62% to 0.13perdilutedshare[8]MarketPositionandRecognition−ForresterResearchrecognizedPalantirasatechnologyleaderinAIandmachinelearningplatforms,scoringAIPhigherthansimilarofferingsfromGoogleandMicrosoft[6]−TheAIplatformmarketisprojectedtogrowatanannualrateof400.13 per diluted share [8] Market Position and Recognition - Forrester Research recognized Palantir as a technology leader in AI and machine learning platforms, scoring AIP higher than similar offerings from Google and Microsoft [6] - The AI platform market is projected to grow at an annual rate of 40%, reaching 153 billion by 2028 [6] Valuation Concerns - Wall Street estimates a 35% earnings increase for Palantir in 2025, but the current valuation of 290 times earnings is considered expensive [10] - The price-to-earnings-to-growth (PEG) ratio exceeds 8, which is significantly higher than the traditional threshold of 2 or 3 for being considered high [10]