NASDAQ:PLTR Surges on Explosive U.S. Growth and AI Adoption
Palantir Technologies (NASDAQ:PLTR) has been one of the most remarkable performers of 2025, rising more than 382% year-over-year to trade near $167.70, with a market capitalization approaching $398 billion. Its valuation metrics remain stretched, with a trailing P/E ratio of 541 and forward P/E near 189, but investors continue to reward the company’s outsized growth in the U.S. commercial AI market. Total revenue for the trailing twelve months reached $3.44 billion, representing a 48% YoY increase, while net income expanded to $763 million on a profit margin above 22%.
Commercial Growth Outpaces Government Contracts for PLTR
The company’s U.S. commercial segment has emerged as the key driver, growing 93% YoY in Q2 and now accounting for 31% of total revenue, up from 23% last year. Total contract value bookings surged 222% YoY to $843 million, while the client base expanded 64% YoY to 485 customers. The top 20 clients now generate an average of $75 million in annual revenue, highlighting the success of Palantir’s “land-and-expand” strategy. This surge in demand underpins operating margins of 46%, propelling the company’s Rule of 40 score to 94, well above SaaS industry benchmarks.
Government Contracts Still Provide the Base
Despite the shift in growth momentum, government clients remain the largest revenue source, representing 55% of Q2 2025 turnover. Palantir secured long-term stability through major contracts including a 10-year $10 billion U.S. Army enterprise agreement, the Maven AI program, and a $218 million Space Force award. Remaining performance obligations rose 77% YoY to $2.4 billion, although only 24% ($1.02B) qualifies as non-cancelable over the next 12 months, leaving revenue visibility dependent on shorter-term government deals. This reliance on flexible contracts poses a risk should budget cuts or cancellations materialize.
International Weakness Exposes Geographic Concentration
While U.S. revenue is accelerating, international operations remain stagnant. The U.K. delivered 26% YoY growth to $97 million, but the rest of the world declined 3% YoY to $144 million. This leaves Palantir increasingly concentrated in the U.S., with 73% of total revenue generated domestically. Competitors such as Microsoft (NASDAQ:MSFT) and Oracle (NYSE:ORCL) maintain stronger global footprints, raising concerns about Palantir’s ability to scale internationally. However, management’s decision to prioritize U.S. opportunities suggests a conscious strategy to maximize margins in the world’s deepest enterprise AI market.
Valuation Premium Under Scrutiny
At a Price/Sales ratio of 119x and EV/EBITDA above 630x, PLTR trades at steep premiums compared to peers such as CrowdStrike (NASDAQ:CRWD) at 25x sales or UiPath (NYSE:PATH) at under 10x. Bulls argue Palantir’s hypergrowth and profitability justify these multiples, particularly given projected EPS growth from $0.64 in 2025 to $0.85 in 2026, with high-end estimates calling for $1.12. Analysts’ price targets reflect the debate, ranging from $45 on the low end to $200 on the high end, with a consensus at $151.74, below the current price.
Balance Sheet Strength and Free Cash Flow Support Expansion
Palantir’s balance sheet provides stability, with $6 billion in cash, debt-to-equity under 4%, and a current ratio of 6.3. Levered free cash flow reached $1.27 billion, supporting investments in its Artificial Intelligence Platform (AIP) and potential buybacks or acquisitions. With an average daily trading volume above 72 million shares, liquidity remains ample for institutional participation. Insider ownership sits at 3.6%, while institutions control 57% of the float. For a detailed look at insider moves, see the Palantir insider transaction profile.
