Executive summary
- Q2 2025 revenue $1.004B, +48% YoY; adjusted EPS $0.16; GAAP EPS $0.13.
- Gross margin 80.8% (Q2 TTM gross profit / revenue); operating margin (adjusted) 46% in Q2 2025.
- Debt-to-equity ~0.04; strong net cash position (cash + short-term investments ≈ $6.0B).
- Market capitalization ≈ $421B; EV/Revenue ≈ 122x (TTM revenue ≈ $3.44B).
- Verdict: Palantir PLTR valuation risks from AI government contracts are material – growth and cashflow are strong, but current multiples embed aggressive commercialization and policy assumptions.
Summary fundamentals
- Latest quarter revenue (Q2 2025): $1,003,697,000.
- Revenue YoY % (Q2 2025): +48% year-over-year.
- Latest quarter EPS (adjusted): $0.16 (Q2 2025 adjusted EPS); GAAP EPS $0.13.
- EPS YoY %: net income up ~144% YoY (net income Q2 2025 $326.7M vs prior year).
- Gross margin (quarter, Jun 30 2025): 80.78% (gross profit $810.76M / revenue $1,003.70M).
- Debt-to-equity (quarter ended Jun 30, 2025): 0.04 (very low leverage).
- Market cap (latest snapshot): ≈ $421B–$424B.
Detailed fundamental analysis
Revenue trends and drivers
Palantir’s revenue acceleration in 2025 is driven by simultaneous expansion in U.S. government contracts and a rapid inflection in U.S. commercial sales. Q2 2025 total revenue reached $1.00B, a 48% increase versus Q2 2024, with U.S. commercial revenue up ~93% YoY and U.S. government revenue up ~53% YoY. These splits indicate that government demand remains core while AI-led commercial adoption is scaling.
Related long-tail searchers will want to note Palantir’s FY 2025 revenue guide was raised to ~45% Y/Y, implying a fiscal-year revenue target north of $4.1B based on management guidance.
Margin drivers and profitability
Palantir reports very high gross margins (~80.8% Q2 TTM) driven by software-native economics and high-value, SaaS-like contracts, plus a relatively low cost of revenue base. Adjusted operating margin in Q2 2025 was 46%, producing a Rule-of-40 score of 94% for the quarter – exceptional for a growth software vendor. These margins reflect scale benefits and a shift from heavy R&D spend to operating leverage as deployments scale.
Balance-sheet strength
Palantir holds large liquid investments: cash & equivalents plus short-term investments total roughly $6.0B in Q2 2025, with modest debt (total debt ≈ $237M), yielding net cash of multiple billions and a debt-to-equity ~0.04. Liquidity supports continued strategic investment and gives downside resilience if commercial growth slows.
Valuation multiples (TTM & forward)
- Trailing twelve-month revenue: ≈ $3.44B; Enterprise Value (EV) ≈ $418–419B, producing EV/Revenue ≈ 121–122x.
- Trailing P/E (TTM) is extremely elevated (several sources showing P/E in the 500–800x range due to small TTM EPS).
- Forward P/E consensus in the ~200x+ range (widely divergent across providers).
Conclusion: valuation multiples are extreme versus enterprise SaaS norms; they price very high future growth and durable margin expansion into perpetuity. Current EV/Revenue implies investors are buying a high-conviction conditional on government contract renewals and fast commercial scaling.
Momentum & technical snapshot
- RSI (14): 60.7 (neutral/borderline bullish).
- MACD (12,26): reported MACD ≈ 4.96 (positive); technical feeds show MACD above signal (short-term bullish momentum).
- 50-day SMA: ≈ $166–167; 200-day SMA: ≈ $119–150 (most data sources converge on ~166 for 50d and ~119–134 for 200d); current price trades above both, indicating secular bullish trend.
- 1-month return vs Nasdaq: PLTR 1-month ≈ +14.1%; Nasdaq Composite 1-month ≈ +5.3%, so PLTR has materially outperformed the index over one month.
- Average daily dollar volume: average volume (20–90 day) ≈ 58–67M shares; at ~$179/share that implies average daily dollar volume ≈ $11.9B.
Implication: momentum is strong and short-term indicators are constructive, but the stock is already priced for exceptional execution; pullbacks will test the valuation narrative.
Peer comparison
Direct peers for valuation and execution comparison are growth-oriented enterprise AI / analytics software companies.
- Snowflake Inc. (SNOW) – high-growth data cloud: revenue growth ~28% LTM; gross margin ~66.8% (TTM); Debt/Equity elevated depending on classification (some data show high leverage measures from convertible instruments); forward P/E reported ~188x by some data providers. Snowflake remains unprofitable on GAAP.
- C3.ai, Inc. (AI) – AI application vendor: recent revenue weakness with Q updates showing revenue ~ $70–108M run-rate quarters; gross margin ~56%; debt-to-equity and leverage figures higher than Palantir; forward P/E not meaningful (negative earnings). C3.ai has more binary operational risk and weaker margin profile than Palantir.
Comparison takeaway: Palantir offers superior gross margins and stronger net cash relative to most small-cap AI peers, but trades at far higher absolute multiples (EV/Revenue and forward P/E) than Snowflake, and is orders of magnitude above C3.ai on valuation. The premium reflects government contract optionality and perceived edge in mission-critical deployments.
Latest earnings highlights & management guidance
- “Total revenue grew 48% Y/Y and 14% Q/Q.”
- “We generated an adjusted operating margin of 46%.”
- “Guides Q3 revenue to 50% Y/Y.”
- “Raises FY 2025 revenue guidance to 45% Y/Y.”
Strategic moves, catalysts & risks
Recent strategic catalysts
- Large U.S. government engagements and a reported multi-year DoD engagement (widely reported) expand Palantir’s defense footprint and revenue visibility.
- New strategic partnership announcements: Boeing chose Palantir for defense manufacturing deployments; the UK Ministry of Defence strategic partnership (~$1B over multi-year reports) increases international defense revenue potential.
- Product and AIP pushes: Palantir is commercializing agentic AI offerings and platformized AI for enterprises, which management cites as a key revenue lever.
Material risks (from filings and press)
- Government contracting concentration: a large share of revenue still tied to U.S. government and defense initiatives; policy, procurement delays, or contract non-renewals introduce binary downside.
- Valuation risk: market capitalization and EV/Revenue imply failure to meet growth or margin forecasts would trigger outsized multiple compression.
- Regulatory and geopolitics: international defense partnerships carry export control and political risk; changes in U.S.-UK defense posture or procurement decisions could alter contract trajectories.
Sourcing: company Q2 investor update and SEC Exhibit 99.1, PRs, and independent news reporting document the items above.
Valuation & scenario analysis
Input data used: TTM revenue ≈ $3.441B; enterprise value ≈ $418.7B; cash & short-term investments ≈ $6.0B; total debt ≈ $0.237B; diluted shares outstanding ≈ 2.37B.
Model: EV/Revenue multiple applied to current TTM revenue; convert EV to equity value using Market Cap = EV – Debt + Cash (equivalently EV + net cash). Price = Market Cap / Shares Outstanding.
Scenarios (assumptions stated; price targets rounded):
- Conservative scenario – EV/Revenue = 40x (assumes growth decelerates and multiples compress to disciplined enterprise software norms under stress): implied price ≈ $60 per share. Assumption: commercial traction stalls to lower growth, multiple re-rates to 40x EV/Rev; margins fall toward long-term SaaS medians.
- Base case – EV/Revenue = 100x (assumes sustained high growth and partial optimism priced): implied price ≈ $148 per share. Assumption: continued revenue acceleration to mid/high-teens to 30%+ growth next several years and margins remain very high, but market applies cautious multiple below current extreme.
- Optimistic scenario – EV/Revenue = 160x (assumes substantial commercial scale, durable monopoly pricing, and defense contract longevity): implied price ≈ $235 per share. Assumption: Palantir converts AI pipeline into multi-year commercial ARR expansion and market maintains faith in long-term cashflows.
Interpretation: current intraday price (~$179) sits between the base and optimistic scenarios; downside to the conservative scenario is severe. Valuation is highly sensitive to multiple and to the sustainability of commercial growth.
Trading checklist & signals
Momentum trader rules (short–medium term)
- Entry: wait for pullback to the 50-day SMA (~$166) on volume below 20-day average and confirm MACD positive crossover; enter 25–35% of intended position size.
- Add-on: add if price holds above the 50-day SMA after two consecutive higher-volume days with RSI < 70.
- Stop: initial stop at 7–10% below entry; tighten stop to breakeven once price reaches +10%.
- Target: scale out at prior short-term resistance zones ($185, $195–200).
Longer-term investor checklist
- Sizing: limit position to a fraction of growth allocation given valuation risk (suggest 1–3% of total equity portfolio for risk-controlled growth exposure).
- Confirmatory indicators before adding: (1) sustained sequential commercial ARR growth >30% YoY, (2) evidence of contract durability (multi-year renewals disclosed), and (3) analyst/market consensus aligns with management guidance.
- Defensive hedge: consider put options or pairing with a short position in an overvalued AI/tech ETF if allocation exceeds 3% of portfolio.
- Re-evaluate if: guidance misses, major government contract is delayed/canceled, or operating margins fall >500 bps QoQ.
