Palantir’s AI Boom: Strong Earnings, Soaring Stock, and What Comes Next

Palantir’s AI Boom: Strong Earnings, Soaring Stock, and What Comes Next

Jacob Falkencrone

Global Head of Investment Strategy

Key points:

  • Palantir reported strong Q4 earnings, beating expectations across the board.
  • The company raised its 2025 revenue forecast and expects U.S. commercial revenue to grow another 54%, but its high valuation (170x forward earnings) raises concerns.
  • While Palantir is well-positioned in AI and defense, competition is intensifying, and the stock’s high expectations could lead to volatility if growth slows, or rivals gain traction.

Palantir Technologies has once again defied expectations, delivering a standout Q4 earnings report that sent its stock surging 23% in after-hours trading. The company, once known primarily for its secretive government contracts, has firmly positioned itself at the center of the AI revolution, riding a wave of demand from both private enterprises and the U.S. government. The company now finds itself at the intersection of some of most powerful themes shaping markets today – AI, defense technology, and Trump 2.0.

For investors, the big question is: How much of this momentum is sustainable, and how much is already baked into the stock price?

A Blockbuster Quarter: AI Takes Center Stage

  • Palantir’s Q4 revenue came in at USD 828 million, a 36% increase year-over-year, handily beating analyst estimates of USD 776 million.
  • Earnings per share reached USD 0.14, exceeding the expected USD 0.11.

More than the numbers, what stood out was the shift in where Palantir’s growth is coming from. For years, Palantir was seen as a defense contractor wrapped in Silicon Valley branding, with much of its revenue dependent on U.S. military and intelligence agencies. That part of the business remains strong, with government revenue rising 45% in Q4. However, the real surprise is the commercial side, where U.S. sales jumped 64%, a sign that businesses are increasingly turning to Palantir’s AI solutions.

CEO Alex Karp described the AI opportunity as “untamed organic growth,” a phrase that captures both the excitement and unpredictability of this technological wave. Like a river bursting its banks, AI is flooding into every industry, and Palantir is positioning itself as a critical tool for companies trying to stay ahead of the current.

Why Palantir is Growing So Fast

At the heart of Palantir’s momentum is its Artificial Intelligence Platform (AIP), which is designed to help companies integrate large-scale AI models into their operations. In a world where businesses are scrambling to understand how to use AI effectively, Palantir is increasingly seen as a translator—turning complex AI models into actionable insights. Meanwhile, its government contracts remain rock-solid, with the U.S. military and intelligence community deepening their reliance on Palantir’s software.

Politics may also play a role in Palantir’s trajectory. With Donald Trump returning to office, the company stands to benefit from a government-wide push for increased defense spending and AI-driven efficiency initiatives. Palantir’s leadership has made no secret of their belief that Trump’s policies will favor their business, with Karp describing government disruptions as opportunities for those who know how to navigate them.

2025 Outlook: Big Ambitions, Bigger Expectations

Palantir has raised its full-year 2025 revenue forecast to between USD 3.74 billion and USD 3.76 billion, well above analysts’ previous estimates. The company also expects U.S. commercial revenue to grow another 54% this year. Free cash flow projections also remain strong, giving the company ample resources for expansion.

The Risks: A High-Wire Act

Despite its strong performance, Palantir’s valuation is a concern. The stock trades at a staggering 170 times forward earnings, far above tech giants with similar growth rates. That means any sign of slowing growth could trigger sharp volatility. Insider selling is also raising eyebrows. CEO Alex Karp and co-founder Peter Thiel have collectively sold billions in shares, raising concerns about whether those closest to the company believe the current valuation is sustainable.

Competition is another risk. The AI space is heating up, with open-source models and international players like China’s DeepSeek R1 threatening to disrupt the market. Palantir may be ahead today, but in a rapidly evolving landscape, staying ahead is the real challenge.

What Investors Should Watch

With Palantir’s stock already at record highs, investors should keep a close eye on a few key factors:

  • AI adoption trends – Is Palantir’s AI platform gaining traction across industries, or is demand peaking?
  • New government contracts – How much more growth can Palantir extract from U.S. defense and intelligence agencies?
  • Competitive threats – Will Palantir maintain its technological lead, or will rivals chip away at its advantage?
  • Stock volatility – Will high expectations lead to a pullback, or can Palantir keep delivering?

Final Thoughts: High Growth, High Expectations

Palantir’s Q4 results confirm that the company is firing on all cylinders, benefiting from booming AI demand, strong government contracts, and expanding commercial adoption. But with a sky-high valuation and increasing competition, the road ahead may not be as smooth as in the past.

With expectations this high, volatility is almost certain. Whether the company can continue defying gravity – or whether its stock will need a reality check – will be one of the biggest market stories in the months ahead.

Quarterly Outlook

01 /

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Trader Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Trader Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992