Palantir's Meteoric Rise Continues in 2024
Palantir Technologies (PLTR) has extended its impressive upward trajectory from 2024 into the new year. The AI software company's shares have surged 41% year-to-date, significantly outpacing the Nasdaq Composite's 3% gain. On Thursday, the stock reached a new record high, jumping 5%.
Financial Success Drives Stock Surge
Palantir's financial performance has fueled its stock's meteoric rise. In February 2025, the company reported a 52% year-over-year surge in fourth-quarter US revenue. Sales to commercial and government clients soared 64% and 45%, respectively. Notably, adjusted operating profit margins increased to 45% from 34% a year earlier. Adjusted operating profits nearly doubled in 2024 to $1.13 billion.
Analysts Adjust EPS Expectations
Following Palantir's strong earnings report, Wall Street analysts have revised their EPS expectations for 2025 and 2026 upwards. Of the 11 analysts who cover the stock, only one upgraded their rating to Neutral, while the lone Buy rating was reiterated by Bank of America.
Skeptics Point to Valuation and Volatility
Despite its positive financials, Palantir's stock has faced skepticism due to its high valuation relative to peers and its historical volatility. Shares currently trade at a forward PE ratio of 181 times, compared to Nvidia's 29 times.
Analyst Perspectives on Valuation
Analysts have divergent views on Palantir's valuation. Morgan Stanley analyst Sanjit Singh argues that its high growth rate justifies its premium valuation. However, DA Davidson's Gil Luria believes the stock's current price implies an unprecedented premium.
Bearish Outlook
RBC Capital Markets analyst Rishi Jaluria is cautious on Palantir's sustainability, despite its solid quarter. He assigns a $40 price target, indicating a potential 68% decline from current levels.