Palantir Technologies (PLTR) kicked off 2025 with a blockbuster first quarter. 

This, in part, has helped PLTR stock rise 57% year-to-date, outpacing the 3% drop in the S&P 500 Index ($SPX) amid tariff-induced market volatility.

With a market capitalization of $260 billion, Palantir Technologies is a U.S.-based software company that develops powerful platforms for data integration, analysis, and artificial intelligence (AI) deployment, primarily for governments and large enterprises. Thanks to strong momentum in its commercial and government segments, Palantir is cementing its position as a transformative force in AI deployment.

Despite Palantir’s rapid growth, Wall Street is now taking a cautious approach. Let’s see how investors should view shares now. 

Financials Continue to Impress

Palantir creates software platforms that enable organizations to integrate, manage, and analyze massive amounts of data. Its Gotham platform is geared primarily toward government agencies. Meanwhile, the Foundry platform is geared toward commercial enterprises. And Palantir’s Artificial Intelligence Platform (AIP), which launched in 2023, is quickly becoming a key growth driver. AIP enables customers to safely and securely use large language models (LLMs) and generative AI without jeopardizing compliance or confidentiality. 

In the first quarter, the government segment generated $487 million in revenue, representing a 45% increase year-over-year. U.S. government revenue contributed $373 million, also up 45%. Notably, Palantir’s ongoing collaboration with the Department of Defense and the deployment of the Maven Smart System are critical to redefining modern warfare through AI.

In Q1, commercial revenue increased 33% to $397 million, with U.S. commercial revenue jumping 71%.  Palantir’s total revenue for the quarter stood at $884 million, a 39% increase, while GAAP profit increased to $0.06 per share from $0.04 the year before. Furthermore, net dollar retention increased to 124%, indicating significant customer expansion. 

Despite the growth in the commercial segment, some analysts doubt that the company can truly scale its commercial business to the levels seen in the government segment. Most believe that relying too heavily on the government will lead to problems when budget cuts happen and policy changes. 

During the earnings call, management was questioned about the U.S. defense budget cuts and reduced federal spending. Shyam Sankar, the company’s chief technology officer, stated that cutting ineffective and bloated government projects is beneficial to the country and highlights Palantir’s efficiency and superior software value. CEO Alex Karp added that Palantir thrives under institutional pressure and scrutiny because it forces agencies to evaluate what truly works. This pressure drives transformation and, once results are demonstrated, it strengthens client loyalty. Palantir’s balance sheet showed $5.4 billion in cash, cash equivalents, and short-term U.S. Treasury securities, with no debt. It also generated $370 million in adjusted free cash flow, demonstrating the company’s ongoing ability to grow profitably. 

Management expressed increased confidence in their strategy. The company stated that as organizations prepare for economic and geopolitical uncertainty, the demand for AI solutions that can significantly improve adaptability and efficiency grows.

Riding on this strength, Palantir raised its full-year 2025 revenue guidance midpoint to $3.896 billion, representing 36% growth. U.S. commercial revenue is now expected to exceed $1.178 billion, a 68% year-over-year increase. For the full year, Palantir also expects to generate $1.6 billion to $1.8 billion in adjusted free cash flow. 

Meanwhile, analysts who cover the stock expect revenue and earnings to climb by 35.3% and 42.5% in 2025. 

Is Palantir Stock a Buy, Hold, or Sell on Wall Street?

Despite the rapid growth, Wall Street has largely remained bearish on Palantir stock, owing to its elevated valuation. 

On that note, Mizuho Securities analyst Gregg Moskowitz has given the stock a “Sell” rating. According to Moskowitz, Palantir’s premium valuation already accounts for significant growth that exceeds consensus expectations, making further upside difficult to justify. He raised a few other points of concern. The recent revenue increase was less significant than in previous quarters, and performance in international commercial markets remains disappointing, the analyst said. Moskowitz raised his price target from $80 to $94 to reflect improved fundamentals, but he remains skeptical that Palantir’s premium valuation can be sustained.

Overall, PLTR is rated as a “Hold.” Among the 20 analysts covering the stock, three recommend a “Strong Buy,” 12 suggest holding, one says it is a “Moderate Sell,” and four have given it a “Strong Sell” rating. Palantir has surpassed its average target of $84. However, its high price estimate of $125 suggests the stock can climb as much as 5% from current levels.

If Palantir can expand its commercial business while maintaining profitability, the stock could reward long-term investors handsomely. However, cautious investors may want to wait for a more favorable entry point.