Palantir Q4 Earnings Preview: How Much Further Can the AI Boom Go? Earnings Will Give the Answer.

TradingKey - Palantir Technologies ( PLTR) is scheduled to release its fourth-quarter fiscal 2025 earnings report after the U.S. market close this Monday (February 2). For the market, this report will serve as a critical test of the company's AI business growth potential and the justification for its high valuation.

Once a darling of AI investing, Palantir was previously embraced by the market, but its momentum has weakened significantly in recent months. Data shows that PLTR's stock price has fallen by more than 24% cumulatively over the past three months, down more than 27% from its previous highs. Its consistent underperformance against the broader market reflects growing investor caution regarding high valuations and growth sustainability.

However, even after the adjustment, the stock has still recorded a strong gain of over 88% in the past year, reflecting market optimism regarding its long-term AI strategy.

Current market sentiment is clearly divided. Optimists believe that as Palantir's Artificial Intelligence Platform (AIP) continues to increase penetration in the commercial and government sectors, the company is poised to maintain a high-growth trajectory. Cautious investors, however, point out that the current valuation is already stretched, and PLTR's performance could be disappointing in the event of a growth slowdown or broader market pressure.

Based on its previously released third-quarter report, Palantir holds an optimistic outlook for the fourth quarter. Management expects Q4 revenue to be between $1.327 billion and $1.331 billion, representing a year-over-year increase of approximately 61%. Additionally, the company raised its full-year revenue guidance range to between $4.396 billion and $4.4 billion.

According to the latest FactSet consensus estimates, fourth-quarter revenue could reach $1.34 billion, a surge of 61.9% year-over-year; earnings per share (EPS) are expected to reach $0.23, an increase of over 64% compared to the same period last year.

AIP-Driven Growth

Palantir's overall robust growth is largely attributed to the expanding scope of applications and customer trust in its Artificial Intelligence Platform (AIP) across both government and private sectors.

In the previous quarter, Palantir's total revenue grew 63% year-over-year to reach $1.18 billion. Notably, U.S. commercial business growth was particularly striking, increasing by 121% year-over-year; U.S. government revenue also grew by 52% during the same period. The market generally believes that the rapid rise in the number of commercial customers and revenue is a key signal that AIP is breaking through the limitations of the traditional public sector and entering broader enterprise scenarios.

Currently, an increasing number of private enterprises are introducing the AIP platform into data-intensive industries such as healthcare, finance, and defense. Leveraging its powerful data analysis, real-time insights, and decision support capabilities, Palantir's platform is helping customers address complex operational challenges, optimize supply chain management, and enhance intelligent forecasting, thereby creating quantifiable business value.

In addition, a recently launched AIP tool—AI Hivemind—has garnered widespread attention. This tool efficiently organizes numerous dynamically generated intelligent agents, supporting not only problem-solving and strategy formulation but also integrating semantic ontologies, granting it structured knowledge understanding and complex scenario processing capabilities. This innovation further enhances the platform's utility in commercial environments and is expected to accelerate customer investment in digital transformation and intelligent upgrades.

Meanwhile, in January this year, the company disclosed a multi-year enterprise agreement with the UK Ministry of Defence, covering data and AI services through 2029. Such long-term government contracts provide stable revenue and remain key drivers for the stock price even as commercial growth continues to accelerate.

Mixed Analyst Perspectives

As escalating geopolitical tensions catalyze sustained government investment in AI and data infrastructure, coupled with rapid growth in commercial market demand, many analysts remain optimistic about Palantir, raising their ratings and price targets.

Citigroup ( C) recently upgraded Palantir's stock rating from "Neutral/High Risk" to "Buy/High Risk" and raised the price target from $210 to $235.

Citi analyst Tyler Radke noted that as enterprise AI and agentic technology development accelerate, combined with the urgency of global defense spending, Palantir's technical advantages in data ontology and forward-deployed engineering will continue to provide value. He also emphasized strong demand in the U.S. commercial market, which has driven three-digit growth in its Remaining Deal Value (RDV) for four consecutive quarters over the past year, expected to significantly boost future earnings estimates.

Phillip Capital also assigned a "Buy" rating to the stock with a price target of $208. The report noted that enterprise customers are shifting from point deployments to company-wide AI integration, driving business applications from defense to broader industries like finance, manufacturing, and healthcare. The firm expects commercial revenue to grow 51% year-over-year, outpacing the 43% growth expected for government revenue, with the commercial segment becoming the primary engine driving the company's growth.

Despite strong bullish sentiment, some analysts remain conservative regarding Palantir's growth sustainability and valuation levels.

RBC Capital Markets analyst Rishi Jaluria is among them. He maintains an "Underperform" rating on PLTR with a price target of $50, implying a potential downside of up to 68% from current levels.

He believes that while geopolitical situations may drive long-term demand, current enterprise contract signing activity is slowing down, posing a risk of decelerating commercial growth. Meanwhile, intensifying industry competition could squeeze the company's market share and profit margins.

Jaluria also pointed out that despite Palantir's ample cash flow, some retail investors are disappointed by the "delayed capital returns" as the company has yet to implement shareholder return mechanisms such as stock buybacks or dividends. This structure—lacking dividends while maintaining a high valuation—further exacerbates controversy and divergence in the market.

From a valuation perspective, PLTR's current P/E ratio is near 350x, far exceeding the software industry median of approximately 30x. Bearish views suggest that such a high premium has already fully priced in future growth; any slight deviation in actual performance could trigger a sharp price adjustment. This is why some analysts continue to warn of "high valuation risks" ahead of the earnings release.