After the closing bell on May 5, Palantir (PLTR) reported its highly anticipated Q1 2025 results, which beat analysts’ revenue and earnings estimates. Despite the upside surprise, PLTR shares fell about 12% on Tuesday as investors reacted to the news. Investors focused on a 10% drop in global sales, worries that government budget cuts will pinch future contracts, and concerns that the stock already trades at rich valuations.

Still, Wedbush recently named Palantir a top pick for 2025. Their analysts argue that Palantir’s AIP platform - its artificial intelligence (AI)‑powered engine for government and enterprise clients - could actually win more business when agencies scramble for efficiency amid a proposed $165 billion cut in federal spending. Rather than sidelining Palantir, Wedbush argues that the cuts could spur demand for its specialized AI tools. The firm's analysts also raised Palantir's price target from $120 to $120, citing the expected AI demand surge.

So, is it too late to buy PLTR? Let’s break down whether the post-earnings dip might be a good entry point for long‑term growth investors.

About Palantir Stock

Founded in 2003, Palantir Technologies is a leader in big-data analytics and AI, powered by its Foundry, Gotham, and Apollo platforms. Governments, enterprises, and institutions rely on these tools to integrate disparate data, drive mission-critical decisions, and enhance operational efficiency. Palantir’s long-term, sticky contracts with customers ranging from NATO’s battlefield systems to Google (GOOG) (GOOGL) Cloud and the U.S. Department of Defense show broad confidence in its AI-powered AIP platform. Currently, the company boasts a $255 billion market capitalization.

The data analytics company has been one of the best-performing S&P 500 Index (($SPX) stocks in 2025. Palantir stock has outperformed the broader market, gaining more than 400% over the past year and rising 45% in 2025, despite the steep post-Q1 selloff.

After this staggering rally, though, PLTR is now trading at a nosebleed valuation, with a forward adjusted price/earnings (P/E) ratio of 186.43 - significantly higher than the sector median of 20x, and well above even its own inflated five-year average of 126x.

Palantir Smashed Q1 Earnings

Although Palantir’s shares plunged after its first‑quarter release, the results themselves were exceptional and easily topped analysts’ expectations. The data analytics specialist reported a 39% year‑over‑year revenue surge to $884 million, driven overwhelmingly by U.S. commercial growth, which exploded 71% to become the company’s largest segment. Customer count jumped 39% to 769, signaling that clients are significantly expanding their contracts over time.

Yet the international commercial business stumbled, with revenue down 5% year‑over‑year and 11% sequentially to $141 million, as European macro headwinds and tariff uncertainty weighed on new deal activity. Strong U.S. performance offset the softness abroad, but investors, who had priced in near‑perfect execution, sold off the stock on any sign of overseas weakness.

Profitability metrics were equally compelling. EPS doubled to $0.80 from $0.40 a year ago, while adjusted operating margin expanded to 44%, powered by levelling revenue growth and disciplined cost management. Adjusted free cash flow leapt from $130 million to $370 million, underscoring the company’s cash‑generation prowess.

Looking ahead, management raised full‑year 2025 revenue guidance to $3.89 billion–$3.9 billion, with adjusted operating income now expected between $1.711 billion and $1.723 billion, and free cash flow guidance boosted to $1.6 billion–$1.8 billion. 

TITAN Program Could be a Game Changer

Palantir’s future prospects are closely tied to its defense initiatives, with the TITAN program being a key opportunity. Under a $178 million U.S. Army contract, Palantir is integrating its AI platform into truck-mounted units that consolidate sensor data from land, air, and space to provide real-time targeting intelligence. If the Army exercises the full option for 100 to 500 vehicles, Palantir could secure substantial, recurring revenue streams.

This contract highlights Palantir’s ability to compete against established defense contractors like Raytheon. With U.S. Department of Defense expenditures nearing $1 trillion, Palantir’s addressable market continues to expand significantly.

Analysts' Ratings and Final Words

Wall Street currently has a “Hold” consensus on PLTR stock. Of 20 analysts, 3 rate it a “Strong Buy,” 12 a “Hold,” 1 a “Moderate Sell,” and 4 a “Strong Sell.”

With a mean price target of $84, the consensus opinion on Wall Street is calling for roughly 28% downside potential from PLTR stock's current price.

At the current stage, buying Palantir now carries considerable risk. Its lofty valuation and hype-driven gains suggest much of the expected upside is already baked in. Still, the stock could extend its rally, as it has for quite some time despite lingering overvaluation concerns. Future gains hinge on reviving international sales, especially in Europe, or leaning into its booming U.S. business. However, earnings growth above 30% annually signals a strong long‑term outlook, despite likely short‑term swings.