Key Points
Analysts expect Palantir Technologies to demonstrate revenue and EPS growth in its Q1 report.
However, Palantir stock has already baked a lot of assumed future growth into the pie.
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Data security and artificial intelligence (AI) deployment specialist Palantir Technologies (NYSE:PLTR) is a darling of the markets for the 2020s. As a major event approaches this month, value-focused investors should consider whether the financial community is too optimistic about Palantir’s future growth prospects.
The AI revolution is still in full swing this year, even amid the tense backdrop of trade-war tensions. Tariffs or no tariffs, businesses seek to refresh their AI capabilities and oftentimes, they’re turning to Palantir Technologies for updates and upgrades.
That’s all well and good, but if the NASDAQ’s first-quarter volatility taught investors anything, it’s that market darlings can fall fast and hard. Palantir Technologies is highly favored in the run-up to its imminent earnings release, but in an ultra-efficient market, great expectations don’t necessarily lead to great outcomes.
Palantir’s Partnership Spree
Before delving into Palantir’s upcoming earnings event, there’s an elephant in the room that I can’t overlook. Specifically, it appears that Palantir Technologies is adopting a strategy of partnering with as many firms as possible.
I’m exaggerating a little bit here, but it sure looks like Palantir Technologies is taking the “more is better” approach to team-ups. During the past couple of months, Palantir has announced strategic partnerships with SAUR Group, Societe Generale, TWG Global, EYSA, Voyager Technologies, and Ondas.
Wait — I’m not even done yet. Palantir Technologies has also recently partnered up with Archer Aviation (NYSE:ACHR), Databricks, R1, and Anthropic. If there’s a popularity contest going on, then clearly Palantir wants the blue ribbon.
Call me a skeptic, but I suspect that Palantir Technologies’ attention and resources could be spread thin with so many collaborations in progress. By itself, this isn’t a reason to dump PLTR stock before May 5. It’s a red flag, though, if the Palantir share price rallied too far, too fast recently based on what I would call a “press release deluge.”
The Vertical Path to $120
So, let’s talk about the “too far, too fast” path to Palantir Technologies’ current share price. PLTR stock zoomed higher to $120 this morning, and this might feel good today but investors should wonder whether it’s sustainable.
Momentum or “momo” traders might like this, but cautious investors should pause and think hard. Believe it or not, Palantir Technologies stock has rallied 60% year to date, 435% over the past 12 months, and 1,108% during the past five years.
We can blame Palantir’s partnership spree for fueling the hype train, but it goes deeper than that. Ultimately, it’s AI fever that made PLTR stock the seemingly unstoppable force it is today.
No longer is Palantir Technologies mainly focused on upgrading military cybersecurity software. Nowadays, Palantir is all-in on the AI trend; check those partnership press release links and you’ll see that Palantir Technologies is as AI-obsessed as ever.
Thus, a share stake in Palantir Technologies is basically a bet that the AI hype train will keep on rolling at its current velocity. Anyone who invested through the dot-com bubble and burst of 2000 knows that when hype trains get derailed, traders quickly abandon market darlings.
Now, Palantir Must Deliver
Finally, it’s time to address the top-of-mind topic: Palantir Technologies will release its first-quarter 2025 financial results on May 5. The stakes are high, and so are the market’s expectations.
The company, frankly, is partly to blame for this. In Palantir’s press release for its fourth-quarter 2024 earnings report, the company proclaimed that it had eviscerated consensus estimates.
I suppose, then, that Palantir Technologies now has to “maul” or “massacre” the market’s first-quarter expectations. Violent verbiage aside, Palantir Technologies issued revenue guidance of 31% year-over-year revenue growth for the full fiscal year of 2025.
That’s an ambitious objective, and now Palantir has to clear a high bar set by the company itself. The analyst community also has high hopes, including a Q1 2025 consensus estimate of $862.13 million in revenue.
This estimate implies consistent, substantial revenue growth over the $678.134 million, $725.516 million, and $827.519 million that Palantir Technologies reported in the three prior quarters. Additionally, Palantir somehow has to impress Wall Street after having grown its revenue by 36% year over year in Q4 of 2024.
To cap it all off, Palantir Technologies has a trailing 12-month price-to-earnings (P/E) ratio of 611.58x. In other words, Palantir’s share price has dramatically outpaced the company’s earnings.
Consequently, Palantir Technologies must deliver in spades on May 5 to justify the parabolic path of Palantir’s share price and valuation. Sure, Palantir Technologies has plenty of partners and popularity in the Age of AI, but when so much success has already been priced into the stock, it’s the unsuspecting investors that might get “eviscerated.”
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