TLDR
- Palantir stock has more than tripled in value over the past 12 months but recently fell 4.7% amid government budget cut concerns
- The company specializes in data analysis software with four platforms: Gotham, Foundry, AIP, and Apollo
- Q4 2024 showed impressive growth with revenue up 36% YoY to $828 million and 45% adjusted operating margin
- Government contracts make up 55% of Palantir’s revenue, making recent defense budget cuts a significant concern
- Goldman Sachs maintains a neutral rating with an $80 price target, citing high valuation and future competitive edge concerns
Palantir Technologies (PLTR) has seen its stock rise dramatically over the past year, more than tripling in value. But recent concerns about government spending cuts have halted this rally, with the stock dropping 4.7% to $84.58 on Friday. This marked the fourth consecutive day of declines for the data analytics company.
Founded in 2003, Palantir initially built software to support U.S. government intelligence work. The company has since expanded into other areas of the public sector and commercial markets.
Palantir’s business model revolves around helping organizations analyze complex datasets to make better decisions. The company does this through four key platforms: Gotham, Foundry, Artificial Intelligence Platform (AIP), and Apollo.
Gotham primarily serves defense clients, while Foundry focuses on commercial customers. Apollo ensures both platforms can deliver optimal services by providing secure updates regardless of the client’s working environment.
AIP is Palantir’s newest offering, focused on artificial intelligence technologies including generative AI. This platform allows existing customers to deploy and run AI on top of their data infrastructure seamlessly.
The company operates on one-to-five-year contracts with its clients. Government customers account for 55% of Palantir’s revenue, while commercial users make up the remaining 45%.
In terms of geographic distribution, the United States represents 66% of the company’s revenue, with international markets accounting for the rest.
Q4 2024 Results
Palantir posted exceptional results in Q4 2024. Revenue climbed 36% year-over-year and 14% sequentially to $828 million.
The U.S. market drove significant growth, with commercial revenue surging 64% and government revenue rising 45% compared to the previous year. The company closed a record 32 deals valued at $10 million or more.
These deals contributed to a total contract value of $1.8 billion, up 56% from the prior year. Palantir’s AI Platform has been central to this momentum, helping the firm multiply its U.S. commercial customer base nearly fivefold over the past three years.
Operationally, the company delivered an impressive “Rule of 40” score of 81 and achieved its highest-ever adjusted operating margin of 45%. Adjusted free cash flow reached $517 million in Q4, representing a 63% margin.
For the full year 2025, Palantir projects revenue of approximately $3.749 billion, representing a 31% increase year-over-year.
However, recent developments have caused investor concern. The U.S. Department of Defense (DoD) canceled plans to use Oracle’s HR software due to delays and cost overruns, highlighting broader cutbacks in government technology spending.
Since the DoD is a key client for Palantir, investors worry that similar cuts could affect the company’s contracts as agencies reassess their tech budgets. The DoD also announced an additional $580 million in budget cuts affecting multiple programs, contracts, and grants.
Goldman Sachs analyst Gabriela Borges maintained a neutral rating on Palantir stock with an $80 price target. After visiting the company’s New York office, she shared insights on Palantir’s core technology, The Ontology, which helps businesses organize and use their data for decision-making.
While acknowledging that Palantir has improved this system over time, Borges noted that its overall approach has remained consistent. As more companies adopt AI, Palantir’s AI Platform has become a major strength.
However, Borges raised concerns that as AI technology advances, companies may find it easier to build their own AI tools. If this happens, Palantir’s services might lose some of their unique appeal in the future.
Another challenge she highlighted is Palantir’s high valuation compared to other software firms. Despite the company’s strong technology, its stock price is more expensive than many peers, making some investors hesitant.
On Wall Street, analysts remain cautious about Palantir stock. According to TipRanks, PLTR has a Hold consensus rating based on four Buys, ten Holds, and four Sell ratings.
The average price target of $92.13 suggests a 7.32% upside potential from current levels. Despite recent concerns, Palantir stock has gained over 275% in the past year.
The key factors for Palantir’s future growth will be its ability to secure new contracts and maintain its competitive edge in AI while navigating potential government budget constraints.
