DoD tests AI models that make it easy to switch from vendors like Palantir
On Tuesday, Morgan Stanley (NYSE:MS) raised the price target for Palantir Technologies Inc . (NASDAQ:PLTR) shares to $98, up from the previous $90, while keeping an Equalweight rating on the stock. The company, now commanding a market capitalization of $292 billion, has seen its stock surge nearly 391% over the past year, trading close to its 52-week high of $125.41. According to InvestingPro analysis, the stock appears to be trading above its Fair Value, with technical indicators suggesting overbought conditions. The firm’s analysts highlighted Palantir’s strong performance in the first quarter, noting the company’s successful navigation through broader macroeconomic uncertainty and its ability to close large deals in both government and commercial sectors.
Palantir reported a year-over-year revenue growth of 45% in its government business, alongside the closing of 139 deals with a total contract value (TCV) of over $1 million each. This included 51 deals valued over $5 million and 31 exceeding $10 million. The company’s U.S. commercial business was particularly strong, with a TCV of $810 million in Q1, marking an impressive year-over-year increase of 183%. The company maintains exceptional gross profit margins of 80.25%, demonstrating strong operational efficiency. Want deeper insights? InvestingPro subscribers have access to 20 additional key metrics and ProTips about Palantir’s financial health and valuation.
The analyst’s commentary underscored key areas where Palantir outperformed, including a 71% year-over-year growth in U.S. commercial business, up from 63% in the previous quarter. Additionally, international government business accelerated to a 46% year-over-year increase, compared to 29% in the last quarter of the previous year. Despite these strengths, the international commercial segment experienced a 5% decline year-over-year, which was a shift from the 3% growth in the prior quarter.
This slight weakness in the international commercial business was seen as a factor that limited the overall revenue beat, which was 2.5% in Q1, compared to 6.5% in Q4. Nevertheless, Palantir’s revenue growth for the quarter was still a robust 39%, outpacing the 36% growth observed in the previous quarter. The company’s overall revenue growth remains strong at 28.79% over the last twelve months, though investors should note the elevated P/E ratio of 593x. For comprehensive analysis of Palantir’s valuation metrics and growth prospects, check out the detailed Pro Research Report available exclusively on InvestingPro.
In other recent news, Palantir Technologies Inc. reported impressive first-quarter 2025 financial results, with revenue increasing 39% year-over-year to $884 million. The company also met its earnings per share (EPS) forecast of $0.13. U.S. revenue surged 55% year-over-year, with commercial revenue rising 71%, underscoring strong growth in its domestic market. Palantir has raised its full-year revenue guidance to between $3.890 billion and $3.902 billion, reflecting a 36% year-over-year growth.
Goldman Sachs updated its outlook on Palantir, increasing the price target to $90 while maintaining a Neutral rating. The firm acknowledged Palantir’s growth potential but highlighted risks related to its market position and valuation. Mizuho (NYSE:MFG) Securities also raised its price target for Palantir to $94, retaining an Underperform rating, citing valuation concerns despite strong financial performance. Raymond (NSE:RYMD) James reaffirmed a Market Perform rating, noting Palantir’s robust start to 2025 and raised revenue guidance, but emphasized the need for the stock to consolidate recent gains.
These developments indicate a mix of optimism and caution among analysts, reflecting Palantir’s strong performance and strategic positioning in the AI sector.
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