Is Palantir a Good Stock to Buy?

Palantir Technologies (PLTR) stock soared to its highest level in mid-February thanks, in part, to its better-than-expected Q4 2024 earnings report before the Wall Street correction lowered the stock price.

Perhaps, unlike other struggling AI stocks with fierce competition in their markets, investors should take a closer look at Palantir due to its defense contract with the U.S. military and other high-level government departments.

Recent Palantir Stock Earnings

As of mid-March 2025, Palantir has nearly recovered to its 50-day average. This rise follows a month-long drop of nearly 30% from its all-time high ($125.41). Palantir stock fell after its high on Feb. 18 due to CEO Alex Karp selling nearly 1 million shares and the perception that budget cuts may happen at The Pentagon. Back in November, the stock traded at $60 a share. In September, the price was just $30 a share.

At $125, Palantir was valued at nearly 300x the trailing earnings and 220x the projected earnings for FY 2025. Some analysts predict it will drop back to $60 per share but momentum is in its favor now.

Why the sudden rise in Palantir stock prices in late March? Part of the bullish theme stems from short-term perception and trends that may project, albeit errantly, into the future.

Another issue is that AI stocks continue to be hit or miss based on market forces. Nvidia stock dropped double digits in Q1 2025. The chipmaker may well face its worst quarter for stocks in 3 years, despite meteoric earnings in the last quarter that soared past analyst expectations. Nvidia dipped due to competition and economic uncertainty. At under

However, Palantir is a different animal. It stands to use deep military connections to gain ground on civilian projects. Whereas Nvidia secured a $25 million contract with the DARPA, Palantir’s involvement goes much deeper.

Palantir’s Earnings Continue to Climb

The Q4 2024 earnings report was more than $50 million above expectations. Earnings per share were 3 cents (14 vs. 11) higher than what was predicted. Even better, Palantir seems to be leveraging the military facets of its AI-enabled systems into the private sector.

Government revenue in Q4 2024 grew to $343 million, 45% year-over-year. Private section revenue grew 64% YoY to $214 million. So, commercial revenue still hasn’t outpaced government contracts.

But Palantir is getting to where it doesn’t have to depend on government deals as much. Management expects sales of $3.74 to $3.76 billion in 2025, topping the estimate of $3.52 billion.

Palantir Has 3 Major Military Contracts Going For It

The AI company delivered its first two TITAN systems to the U.S. Army in early March. This represents the first time a commercial software company worked as a primary contractor for a major hardware program in the military.

Known as the Tactical Intelligence Targeting Access Node (TITAN), the U.S. Army awarded Phase 3 of the contract to Palantir a year ago. It is worth $178.4 million, and it will deploy 10 total units. The prototypes met the Army’s operational requirements. These ground units leverage AI and machine learning to provide real-time intelligence from satellites and other data to improve targeting and situational awareness for troops. Subcontractors include Northrup Grumman.

In December 2024, Palantir won a $400.7 million contract extension to continue its work supporting the Vantage program. Vantage is the Army’s AI-driven data analytics platform that allows senior leaders to accelerate the decision-making process for personnel readiness.

The largest contract was for the MAVEN Smart System prototype, valued at $480 million and secured in May 2025. The goal of MAVEN is to identify positive targets quickly. The system will blend data from intelligence, surveillance, and reconnaissance systems. Then, it uses AI to filter for specific user-defined parameters to assess a situation in real-time.

When Palantir went public in September 2020, it already had more than a decade of government contracts behind it. More than $2.5 billion in contracts have flowed to the AI company.

But its stock plummeted in mid-February when there were reports of budget cuts coming to the Pentagon.

Can Palantir Grow Beyond Military Contracts?

The AI company’s most recent earnings report showed its civilian arm is growing. Will it grow fast enough if military budget cuts are coming?

Palantir has some high-profile commercial clients using its Foundry platform for data integration and analysis. Merck (MRK) uses Palantir’s platform to distill data for cancer research. Airbus (EADSF) minimizes flight delays. Ferrari (RACE) optimizes its racing strategies by tapping into performance data it gathers from Foundry.

All three of these commercial clients deal with massive amounts of data. Parsing this data into usable information is what Palantir’s platform is designed to do.

Other commercial companies include AT&T, Exxon Mobil, CVS, FOX, AARP, Lowe’s and FOX. Nearly 700 companies in the United States pay for the platform. U.S. commercial remaining deal values were $1.79 billion for Q4 2024, up 99% year-over-year. The firm closed a record $803 million in deals in the same quarter. 129 deals were worth at least $1 million each.

Palantir is becoming a juggernaut with its varied AI platforms. Can it maintain this momentum?

Palantir May Need to Spend Money to Make Money

It may seem like AI companies don’t need a lot of overhead to operate. However, AI platforms rely on data storage that can never go down. Data centers must keep AI and machine learning platforms connected, otherwise they don’t perform the jobs they need to. AI learns how to search through this data quickly.

The four of the Magnificent Seven tech megacaps, Microsoft, Amazon, Alphabet (Google), and Meta (Facebook), plan to spend $320 billion collectively on AI technologies in 2025. They spent $230 billion in 2024. Part of these expenditures are for data center construction.

How will Palantir’s rapid expansion fit into the mix of investments? The firm has very high gross margins of nearly 79% with net cash of $2.4 billion and zero debt in Q4 2024, giving it outstanding operational leverage now and into 2030.

Is Palantir a Good Stock to Buy?

For now, 10 out of 18 analyst have a wait-and-see attitude of Hold while the consensus one-year price target comes in at $94.27, with a max price estimate of $120 for 2025.

Palantir must keep its momentum going. Keep an eye on any press releases for new contracts it lands in the commercial sector, then possibly make a move to buy.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.