Palantir Earnings Demolish Expectations on AI Growth. The Stock Is Zooming.

Palantir Technologies Inc. (PLTR) has shattered Wall Street's expectations with its latest earnings report, driven by surging demand for its Artificial Intelligence Platform (AIP). The company's stock price has soared in response, reflecting investors' enthusiasm for Palantir's AI growth prospects.



Palantir's Q4 2024 earnings report, released after the market closed on Monday, February 3, 2025, showcased impressive growth in revenue and earnings. The company's revenue grew 36% year over year to $828 million, surpassing analysts' expectations of $776 million. Earnings came in at $79.01 million, or 3 cents per share, down from $93.39 million, or 4 cents per share, a year earlier, but still ahead of expectations. Adjusted earnings after stock appreciation rights jumped 80% to $341.95 million, or 14 cents per share, topping the analyst consensus of $0.11 per share.



Palantir's CEO, Alex Karp, attributed the company's strong performance to its deepening position at the center of the AI revolution. He highlighted that Palantir's early insights surrounding the commoditization of large language models have evolved from theory to fact, reflecting the company's ability to stay ahead of the curve in the rapidly evolving AI landscape.

Palantir's U.S. commercial revenue grew 64% from a year ago to $214 million, while U.S. government revenues rose 45% year over year to $343 million. The company's guidance for the current quarter and full year also exceeded analysts' expectations, reflecting the strong momentum in its U.S. business.

Palantir's stock price surged more than 10% in extended trading on Monday, following the earnings release. The stock has gained more than 340% in 2024, making it one of the best-performing stocks on the S&P 500 index. Investors are bullish on Palantir's prospects, given the company's strong earnings performance and the potential for continued growth in its AI offerings.

However, there are concerns about the sustainability of Palantir's current growth rate, given the high valuations and potential market saturation in its AI offerings. The company's stock trades at an astounding 65 times sales and 358 times earnings, making it far more expensive than other popular AI stocks like Nvidia (NASDAQ: NVDA), which trades at 51 times earnings and 28 times sales. To reach Nvidia's current valuation, Palantir would need to achieve a 30% profit margin and 40% companywide revenue growth, which is unlikely given the limiting factor of Palantir's product price.

Moreover, Palantir's U.S. client list is relatively small, with only 321 U.S. commercial customers, indicating that its potential customer base is capped due to the high cost of its software. Companies with significant technological resources may also be able to build some of Palantir's offerings in-house, further limiting its customer base.

In conclusion, Palantir's latest earnings report has demolished expectations, driven by surging demand for its AI offerings. The company's stock price has soared in response, reflecting investors' enthusiasm for Palantir's AI growth prospects. However, there are concerns about the sustainability of Palantir's current growth rate, given the high valuations and potential market saturation in its AI offerings. Investors should closely monitor Palantir's progress and assess the company's ability to maintain its momentum in the AI sector.