TLDR:
- Palantir stock surged 18.2% on Wednesday following Trump’s announcement of a 90-day tariff pause for all countries except China
- The company’s share price is now up 21.5% across 2025’s trading despite market volatility
- Palantir expects Q1 2025 sales between $858-862 million, representing 35.6% year-over-year growth
- For full-year 2025, Palantir forecasts revenue of $3.741-3.757 billion, about 31% annual growth
- Despite trading at high valuation multiples (138x forward P/E), some analysts see up to 35% upside potential
Palantir’s stock skyrocketed on Wednesday, climbing an impressive 18.2% amid a broader tech rally. The data analytics company’s shares jumped as investors reacted to President Trump’s announcement about changes to his tariff policy.
The surge came as part of a larger market rebound. The S&P 500 gained 8.5% while the Nasdaq Composite rallied 9.9% during the same trading session.
Trump’s decision to pause reciprocal tariffs for most countries sparked the rally. The president announced on Truth Social that there would be a 90-day grace period on tariffs for all nations except China.
During this three-month window, imported goods from these countries will face a reduced 10% tax rate. This marks a shift from the administration’s previous stance on trade policy.
In contrast, the Trump administration is taking a harder line on China. The tariff rate on Chinese goods will increase from 104% to 125%, showing continued trade tensions with Beijing.
Strong Financial Outlook
Palantir continues to project robust growth for 2025. In its most recent guidance, the company expects Q1 sales between $858 million and $862 million.
This forecast represents year-over-year sales growth of 35.6% at the midpoint. Such growth rates are rare for companies of Palantir’s size.
For the full year, Palantir anticipates sales between $3.741 billion and $3.757 billion. This translates to annual growth of about 31% at the midpoint of the guidance range.
The company also projects healthy cash flow. Non-GAAP free cash flow for 2025 is expected to land between $1.5 billion and $1.7 billion.
This would represent year-over-year growth of 28% at the midpoint. Free cash flow is a key metric investors watch to evaluate a company’s financial health.
Commercial Expansion Driving Growth
Palantir’s commercial business has become a major growth engine. The company reported 2024 revenue of $2.87 billion, up 29% compared to the previous year.
U.S. commercial sales were particularly strong, climbing 64% in Q4 2024. This rapid expansion shows Palantir’s success in bringing its data analytics tools to corporate customers.
The company achieved profitability milestones in 2024. Adjusted earnings rose 75% to $0.41 per share, exceeding analyst estimates.
Palantir also posted a record Q4 free cash flow of $1.25 billion. Perhaps most importantly, the company reached profitability on a GAAP basis, a key achievement for tech firms.
Despite these impressive results, some analysts remain cautious. The current consensus rating on Palantir stock is “Hold” according to recent reports.
Valuation Concerns Persist
The hesitation from analysts stems largely from Palantir’s high valuation multiples. The stock trades at approximately 138 times forward earnings.
Its price-to-sales ratio stands at 48, well above industry medians. These elevated metrics suggest investors are pricing in substantial future growth.
Palantir shares currently trade well above the consensus target price of $90. However, the most optimistic analysts see room for further gains.
The street-high estimate of $125 suggests potential upside of 35% from current levels. This wide range of price targets highlights the disagreement about Palantir’s fair value.
Despite hitting nearly $124 in mid-February, Palantir stock remains about 26% below its 52-week high. The recent price surge has helped close some of that gap.
With the rapidly changing tariff landscape, questions remain about Palantir’s next moves. The company’s upcoming earnings report will be closely watched for any guidance adjustments.
President Trump’s evolving trade policies could impact technology firms like Palantir in various ways. The 90-day tariff pause provides temporary clarity, but longer-term trade policy remains uncertain.
