PalantirPLTR

CEO Alex Karp is known for his colorful earnings call tirades, hot takes, and die-hard appreciation of Western values. Despite that, he’s likely more famous for the 390% rally that the data analytics titan has seen over the past year, which has made it one of the best-performing stocks in recent years and a new entry in the S&P 500 in late 2024. It also made him one of the index’s best-paid CEOs.

Palantir’s bubbly valuation has been ascertained courtesy of retail investors and institutions that see it as a Trump-flavored trade and AI bet, with its dominance in government contracts front and center. But to remain the best-performing stock in the S&P 500, it’ll need to maintain its fast growth — which isn’t necessarily an easy task in times like these.

The threat of high expectations: However, it hasn’t covered for an extremely steep valuation. At a price-to-earnings ratio of 600x,PLTR

is among the most expensive stocks on the market. That’s part of why expectations for this $300B goliath were so steep on Monday. Thankfully, it showed that its genre of AI is gaining popularity with businesses, with CEO Alex Karp saying, “We are delivering the operating system for the modern enterprise in the era of AI.”

• Palantir’s revenues rose 39% to $884M, with growth led by a 71% increase in commercial / enterprise revenues ($255M) and a still-impressive 45% rise in its government segment ($373M).
• The Colorado-based defense firm said that it closed 139 deals worth at least $1M in the quarter; 51 of them exceeded $5M, and 31 exceeded $10M, with the number of deals doubling year over year.

DOGE Drive

Although Palantir saw strong enterprise growth, investors were also curious about the state of its largest customer — the US federal government. In February, Karp said that DOGE would be “good for America” and “very good for Palantir.” However, investors have been worried about how cuts to federal spending would affect the defense contractor. So far, it hasn’t.

• Palantir has continued winning contracts in spite of fears of a defense spending slowdown, including a new $30M contract for ICE, an unknown IRS data project, and even buys from NATO.
• Just last week, the Army rated Palantir’s new “intelligence-gathering truck” Titan as one of its “highest performing” programs — underlying its increasingly integral role in the defense apparatus.

Forward-looking: On strong enterprise and government revenues, Palantir hiked its revenue outlook for 2025, now forecasting that the organization would bring in approximately $3.9B in 2025 — up from $3.75B in February. However, despite its fast growth, analysts remain split on the company’s trajectory. Some, like Wedbush’s Dan Ives, see the national security supplier continuing to grow into its lofty P/E, while firms like UBS caution about the picture for federal spending. Others like RBC remain highly skeptical of the company, with a price target of $40, citing the poor risk-reward.PLTR

fell 7.3% after hours.