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Palantir Q2 Earnings Preview: Can PLTR sustain the multiple expansion on its AI strategy?

Equities 3 minutes to read
Neil Wilson
Neil Wilson

Investor Content Strategist

Palantir Q2 Earnings Preview: Can PLTR sustain the multiple expansion on its AI strategy?

Key Points

  • Palantir reports Q2 earnings on Monday, 4 August, after the market closes
  • Huge momentum trade with PLTR up 110% YTD but high multiple leaves little room for any slip ups
  • Consensus expectations indicate $939 million in revenue (+39% YoY) and $0.14 EPS (+54% YoY).

Palantir reports Q2 earnings on Monday, 4 August, after the market closes. The stock has seen a huge ramp this year, climbing over 110% by the last trading day in July. Its ascent has seen the valuation grow increasingly out of step with normal multiples, however many see it as a one-of-a-kind investment as a pureplay AI stock.

Q1 Recap

Palantir beat quarterly revenue estimates and boosted its full-year guidance “We are delivering the operating system for the modern enterprise in the era of AI,” CEO Alex Karp wrote in the earnings release. It’s worth noting just how incredibly bullish Karp has been sounding in the earnings calls – something to watch for and consider in the earnings call on Monday. The CEO sets the tone here.

Q1 2025 Highlights

  • U.S. revenue grew 55% year-over-year and 13% quarter-over-quarter to $628 million

  • U.S. commercial revenue grew 71% year-over-year and 19% quarter-over-quarter to $255 million

  • U.S. government revenue grew 45% year-over-year and 9% quarter-over-quarter to $373 million

  • Revenue grew 39% year-over-year and 7% quarter-over-quarter to $884 million

  • Closed 139 deals of at least $1 million, 51 deals of at least $5 million, and 31 deals of at least $10 million

Q2 Expectations: No Room for Error

Consensus expectations indicate $939 million in revenue (+39% YoY) and $0.14 EPS (+54% YoY). Net income is seen at $198mn.

 

For Q2 2025, Palantir guided:

  • Revenue of between $934 – $938 million.

  • Adjusted income from operations of between $401 – $405 million.

For full year 2025, Palantir guided:

  • Revenues of $3.890 – $3.902 billion.

  • U.S. commercial revenues in excess of $1.178 billion, representing a growth rate of at least 68%.

  • Adjusted income from operations between $1.711 – $1.723 billion.

  • Adjusted free cash flow of $1.6 – $1.8 billion.

Valuation

PLTR trades at a huge premium - 116x 2025 sales and over 250x forward earnings. The main driver of PLTR’s price and the reason why it’s got such a huge multiple is the total addressable market its software can ultimately serve.

Q2 may well beat expectations given the recent performance and demand for its Artificial Intelligence Platform (AIP), but the question is the outlook and positive surprises to sustain the growth narrative and valuation premium. Absent any positive surprises we could see the stock pull back.

Even if there is a beat, the stock is apt to remain volatile. After the Q1 report card shares fell over 12% the next day thanks largely to a 10% decline in global sales, raising concerns about its ability to tap markets outside of the US at quite the same pace as at home.

Analyst Views

Loop Capital raised its price target on Palantir this week, taking it from $155 to $178, maintaining a buy rating, having already hiked the PT on the stock from $130 in June.

It expects the company to deliver another beat and raise, with the beat on revenues seen ahead of the average beat of the last five quarters of 4.3% above the midpoint of guidance. Justifying the stock’s huge multiple, Loop cites AI leadership and the fact it’s one of a handful of pure-play AI software stocks, whilst it also boasts category-leading margins.

Piper Sandler initiated coverage with an overweight rating, citing “one-of-a-kind" growth, while Wedbush raised its price target on Palantir to $160, citing the AI strategy.

 

PLTR analyst views
Source: Saxo
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