Palantir Stock Forecast 2025: Can PLTR Justify Its High Valuation?

Palantir leads the AI software pack in terms of strong earnings reports this past quarter as the company achieved significant milestones, the most impressive being US commercial revenue grew 93% YoY and 20% sequentially. You will be hard pressed to find this kind of QoQ growth across AI’s biggest players. 

The Artificial Intelligence Platform (AIP) is driving most of the Commercial growth as there was a clear and obvious revenue inflection when AIP launched in mid-2023. AIP is a cloud-agnostic and model-agnostic platform that connects AI with existing systems and operations. AIP goes beyond what LLMs can deliver on their own by embedding models in workflows and logic. The value creation comes from being able to work with incomplete data sets through the ontology layer while also offering a level of reasoning that goes far beyond just analysing the data itself.  

AIP’s scalability and flexibility continues to attract larger and more ambitious commercial engagements. As you’ll see below, key metrics such as total contract value (TCV), US commercial customer count, US commercial remaining deal value (RDV) and RPO are supportive of continued growth in future quarters.   

There are also robust cash flows and expanding margins to strengthen the story. However, what is this Perfect 10 worth? In fact, Palantir is well beyond a Perfect 10 and is rather a Perfect 100 as its forward P/S sits at an astonishing 104. This means taking FY2025 revenue of $4.2B , it would take over 100 years to pay back its current market cap.

Below, the I/O Fund team weighs in on the future growth opportunities of Palantir, the spectacular earnings report and how we view it’s hotly debated valuation. 

Palantir’s Platforms: The Foundation of Its AI Growth Strategy

Palantir’s first platform was Gotham for government purposes before many of the integrated features were expanded to Foundry, which launched around 2021 for commercial purposes (exact date is not available but generally understood to be around this time).   

Gotham and Foundry create a unified data set for actionable insights across industries such as manufacturing, product development, and customer experience. Palantir primarily uses its customer's own databases for data but may also use publicly available information, like social media, for government clients. The system is traditionally deployed on-site at the customer's data center.  

Its main competitive advantage is its ability to work with incomplete data sets, unlike traditional business intelligence tools that require complete data. Palantir describes this as offering "actionable depth"—focusing on the reasoning behind decision-making, not just analyzing the data itself. 

The core platforms are designed to create a model of the real world by analyzing numerous data points. Unlike traditional SQL databases, they allow users to query data using natural language and receive results in real-time. 

The Gotham platform enables users to identify patterns hidden deep within datasets using semantic, temporal, geospatial and full-text analysis.   

Palantir Foundry is the commercial offering and has four layers of tooling: Foundry Core, Data Foundation, Ontology and Workflows. The Ontology layer offers a distinct, competitive advantage by allowing datasets to be turned into real-world concepts with the ability to accelerate on the company’s core ontology to reduce redundancy. Workflows are where it all comes together in an integrated environment. When a user has a question, it answers it using all layers and tools available 

The Apollo layer provides continuous delivery and an automated configuration layer that enables Foundry and Gotham to operate across all cloud environments and in places where there is little to no connectivity. On top of Palantir being able to form conclusions from incomplete data sets, the company can also deploy its platform and applications anywhere. 

Palantir’s marketing team says Apollo “goes where no SaaS has gone before” because it allows what is done on-premises to also run on multi-cloud SaaS with code that is deployed across all environments rather than written for a specific environment. 

Where bandwidth is not an issue, the company transmits all raw inputs and enriched metadata from models. Where there are constraints, the platform transmits meta-data only which can reduce bitrate by 20X. 

Apollo Edge AI creates a "meta-constellation" by linking up to 237 satellites to reduce decision-making delays. This network coordinates hundreds of sensors and AI models, enabling complex tasks like tracking submarines in areas without bandwidth. One example is tracking submarines that pose a threat to the U.S. and its allies. In this case, submarines are being tracked on a granular level in areas where there is no bandwidth available. A key feature is its ability to operate independently, without relying on a single cloud provider such as AWS or Azure. 

Palantir’s Artificial Intelligence Platform (AIP) 

The Artificial Intelligence Platform has helped the stock surge in recent years as it integrates generative AI with operational data and workflows. When AIP is combined with Foundry and Apollo, it provides an AI service mesh that can run hundreds of microservices, scale compute through its Rubix engine and orchestrate updates through Apollo. Like Apollo, AIP Is independent from any one cloud environment.   

AIP Ontology is what Separates Palantir:  

The knowledge graph referred to as Ontology is a distinct advantage. The graph offers better context than a large language model would on its own – or as Palantir states, it’s “the reasoning that goes into decision-making.”   

You will often hear the management team state large language models will become commoditized, which is a way of saying the software that is on top of the LLM is where value creation comes from rather than the LLM alone. For this reason, AIP is designed to not only be cloud agnostic but to also be LLM-agnostic as it works with any large language model – for example, OpenAI, Anthropic, Meta’s Llama, etc.   

The platform also offers an AI agent workflows for building AI agents that are further optimized for specific use cases and customized through additional tools. Autonomous agents can be built and tested on the platform.    

When it comes to security and governance, Palantir’s roots in government contracts means the software company is exceptional compared to peers in this area. 

Enterprise Growth in AI is Accelerating 

Cloud and model providers are now pushing for greater enterprise AI adoption, a trend that arguably will benefit Palantir just as much from new use cases for AI, and increasing amounts of data generated from AI models and agents. 

For example, OpenAI CEO Sam Altman told investors that they “should expect a huge focus from us on really leaning into enterprise,” as the company unveiled an array of integrations such as integrating Codex with Salesforce’s Slack, or using Figma in chats to create diagrams. OpenAI also launched AgentKit, aiming to provide its 4 million developers with a “unified suite” for AI agent development, a key area other enterprise-focused software firms like ServiceNow are focusing on.  

IBM teamed up with Anthropic on Tuesday to integrate its Claude models on IBM’s platform to advance enterprise software development, with IBM noting that early testing across 6,000 clients found productivity increases of ~45% on average with recognizable cost savings. This follows Anthropic’s announcement on Monday that it would roll out its Claude models to Deloitte’s entire 500,000 global workforce.  

… and Surging Token Growth Support Palantir’s Story 

Surging token growth in a way also supports rising enterprise AI adoption and a tailwind for growth for Palantir, despite a majority of tokens likely being generated by the hundreds of millions of users for consumer-facing AI products. OpenAI disclosed that it is processing 6 billion tokens per minute, or ~260 trillion per month, while Google’s token generation more than doubled to 980 trillion in one month.  

AI agents are expected to generate magnitudes more tokens, with Anthropic estimating agents process 4x more tokens and multi-agent systems 15x more than typical chatbot interactions. Over the long run, Dell projects data generated will more than triple from 2024 to 2029, from 174 ZB to 523 ZB. To put this in perspective, 1 ZB is approximately equivalent to nearly 4 billion 256GB iPhones, and over the next four years, 350x that.  

For Palantir’s AIP, which connects frontier models directly to enterprise data streams, this creates a surge in data that Palantir can then contextualize and provide value for decision making for its customers. There is already more evidence below the headline figures that Palantir is benefiting from increasing enterprise AI adoption, such as Palantir’s quarterly deals closed, which not only shows that its deal flywheel remains healthy with 13% QoQ growth in Q2 (accelerating from 8% QoQ in Q1), but also an increasing amount of larger deals over the last three quarters.   

Palantir’s quarterly deals closed rose 13% sequentially in Q2, accelerating from 8% growth in Q1, signaling strong AI-driven enterprise growth momentum.

Palantir Raises FY Guidance Following Strong Earnings Performance

Palantir's second-quarter performance surpassed a significant one billion revenue milestone for the first time. This achievement was driven by remarkable 48% YoY growth to $1.0 billion, a figure that outpaced consensus estimates by 6.8%. The result represents a dramatic inflection from the 12.7% growth reported in Q2 2023—the launch quarter of its Artificial Intelligence Platform (AIP), underscoring the platform's profound impact.  

Most importantly, Q2 marked the eighth consecutive quarter of accelerating revenue growth, with the rate increasing by 870 basis points sequentially, signalling powerful and sustained business momentum driven by AI. The Q2 revenue growth rate also smashed the high end of the company’s prior guidance by nearly 10 percentage points and represents a 21 percentage points increase compared to the growth rate in the same period last year.  

The company is witnessing strong growth in customers, which grew by 43% YoY and 10% sequentially to 849. Most importantly, revenue from the largest customers continues to expand. Second quarter trailing 12-month revenue from the top 20 customers increased 30% YoY to $75 million per customer, indicating strong market adoption and consistent expansion. 

AIP remains the primary driver of the company’s revenue reacceleration. Its scalability, flexibility, and adaptability enable rapid integration across enterprises. Commercial customers leverage Palantir’s AI and machine learning capabilities to harness the power of cutting-edge large language models (LLMs) within Foundry and Gotham, delivering near-instant analytics and insights, as well as meaningful gains in productivity and efficiency. The company’s US commercial revenue was the main driver of growth, which accelerated 22 percentage points sequentially to 93% YoY growth to $306 million. 

Palantir’s Q2 revenue growth surged 870 basis points quarter-over-quarter, highlighting powerful AI-driven momentum and accelerating enterprise adoption.

The company's Q3 revenue guide was also impressive in the range of $1.083 billion to $1.087 billion, representing a YoY growth of 49.5% at the midpoint. On a sequential basis it represents an 8-percentage growth and is the highest sequential revenue growth guide in the company’s history.  

The current consensus estimates point to a 50.5% YoY growth to $1.09 billion. The company's Q3 revenue estimates have witnessed strong positive revisions, up from 34.8% during the first week of May, representing a solid 15.7 percentage point improvement within five months. While Palantir has been delivering tremendous results and consecutive acceleration on the top-line each quarter, a crucial moment to watch for will be when the company reaches its peak growth quarter. Analysts are currently modelling this to come as early as Q4 with revenue growth expected to be 44%, decelerating more than 6 points sequentially. This could be a tough spot for investors considering the company's stretched valuation, as there has yet to be a test of growth peaking and decelerating. 

On the back of the solid Q2 results the management also raised the full year 2025 revenue guidance midpoint to $4.146 billion, representing a 44.7% YoY growth rate, a solid 880 basis points increase over the full year 2025 revenue guidance provided last quarter, and the largest ever full year revenue guidance raise. 

Analysts expect 2025 revenue to grow 45.3% YoY to $4.16 billion, an increase of 10 percentage points from the 35.3% growth expected in the beginning of May. Looking forward, analysts expect 2026 revenue to grow 35% YoY to $5.62 billion and 34.4% YoY growth to $7.55 billion in 2027. 

Palantir Stock Gains as U.S. Commercial Revenue Jumps 22%

AIP continues to drive strong results for the company’s US commercial segment. The Q2 US commercial revenue grew by a whopping 93% YoY and 20% sequential growth to $306 million. Revenue growth rate accelerated from 71% YoY growth and 19% sequential growth recorded in the previous quarter.  

The strong acceleration also led to US commercial revenue to comprise 31% of the company’s Q2 revenue compared to 23% in the same period last year. If we exclude revenue from strategic commercial contracts, the Q2 US commercial revenue grew by 95% YoY and 20% sequentially. Management also emphasized during the earnings call that the company’s products are used in real-world applications and provide tangible benefits. The company is benefiting from larger new deals and the continued strong momentum with existing customers, driving strong revenue growth. 

U.S. commercial revenue growth accelerated from 22% to 93% year-over-year in Q2 2025, reflecting surging enterprise adoption and AI-driven demand.

Here are some of the top highlights from the quarter for US commercial: 

• The company reported the strongest quarter of US commercial TCV booked at $843 million, representing a YoY growth of 222%. 
• Over the trailing twelve months, the company closed $2.8 billion of US commercial TCV bookings, an increase of 141% from the prior 12 months period, demonstrating the demand for AI production use cases. 
• Total remaining deal value in the US commercial segment was up 145% YoY and 20% sequentially, reflecting continued momentum and expanding customer demand. 
• The US commercial customers grew by 64% YoY and 12% sequentially to 485 customers, adding 53 customers in the recent quarter. It also implies that the company’s customers increased 4x from Q2 2022. 

Management shared a couple of TCV highlights during the earnings call, wherein a healthcare company completed a boot camp in April of this year and later signed a $88 million TCV deal a month later to coordinate and automate its patient care across facilities. Similarly, an American telecom company started working with the company in 2022 and since then has increased their contract 10x, projecting hundreds of millions in cost savings.    

Management raised its full-year US commercial revenue guidance to over $1.302 billion, implying at least 85% YoY growth. This updated outlook is 17 percentage points higher than the prior quarter’s guidance, reflecting strong commercial business momentum. 

Overall, Commercial revenue grew by 47% YoY and 14% sequentially to $451 million. Revenue accelerated by 14 percentage points from the previous quarter. When excluding the impact from strategic commercial contracts, second-quarter commercial revenue grew 49% YoY and 14% sequentially. The company closed $1.1 billion in commercial TCV bookings, up 185% YoY. 

International Commercial revenue remains a weak spot, as Q2 revenue declined (-3%) YoY but grew just 2% sequentially to $144 million. Management noted in the earnings call that Palantir continues to “capitalize on targeted growth opportunities in Asia, the Middle East and beyond, but remain focused on accelerating the growth in our U.S. business.” 

Strong Government Contracts Drive 49% Revenue Growth for Palantir

While Palantir’s success in the commercial sector is now quite evident, the government sector remains Palantir’s bread and butter. Government revenue accounted for 55% of the total revenue, and the commercial revenue accounted for the remaining 45%. Government outpaced commercial growth for the fourth consecutive quarter; however, if we exclude strategic commercial contracts, both government revenue and commercial revenue grew by 49% in the recent quarter. 

In Q2, government revenue grew by 49% YoY and 14% sequentially to $553 million, accelerating four percentage points from the previous quarter. Within that, US government business grew by 53% YoY and 14% sequentially. 

Management highlighted during the Q2 earnings call that the US Space Force's Space Systems Command had awarded the company a $218 million delivery order to support seamless, synchronized multi-domain warfighting for the space and air operational communities. Additionally, the ceiling for the Maven Smart System contract was increased by $795 million to prepare for what they expect will be significant demand from combatant commands for the AI-powered software capabilities over the next four years.  

In early August, the company secured a 10-year enterprise agreement with the Army, valued at up to $10 billion, which consolidates 75 existing contracts into a single contract. More recently, the company also won the first billion-dollar deal outside the US. It signed a $1 billion AI deal with the UK’s Ministry of Defence. 

What Key Metrics are Saying About Palantir’s Future Growth 

Clearly, Palantir has been a winner up to this point – there is no denying that. However, what are the key metrics saying about future growth? Do the company’s fundamentals support the market’s lofty expectations—and what does a fair valuation look like from here? 

Below, we examine the following 

• If the key metrics support continued growth – with one metric that you must not miss 
• The I/O Fund’s thoughts on Palantir’s valuation  
• The one risk that Palantir bulls are overlooking 
• Our Premium members received a 15,000 word report outlining the Top 15 AI Stocks for Q3 of 2025 with many stocks seeing higher returns last quarter than Palantir. Sign up now to find out which AI stocks we like better than Palantir.