Is it the right moment to sell Palantir stocks, priced at $190?
Palantir Technologies, the data analytics and services company, has seen a significant surge in its stock price in 2025, driven by major government contracts, rapid expansion in AI adoption across commercial sectors, and strong financial performance.
Fueling the Rally
The company secured large agreements such as an $800 million deal with the U.S. Department of Defense, projects with Immigration and Customs Enforcement, Fannie Mae, and the U.S. Army. These contracts provide significant revenue stability and growth potential. Palantir’s AI platforms (AIP, Gotham, Foundry) have seen strong traction in industries like healthcare, logistics, insurance, and manufacturing. In Q1 2025, U.S. commercial revenue jumped 71%, and total contract value in U.S. commercial business increased by 134% year-over-year, highlighting robust business momentum.
In Q2 2025, Palantir reported a 48% year-over-year revenue increase to $1 billion, the highest in its history, along with a 24% rise in adjusted operating income. This consistent beat of expectations drives investor optimism.
Retail investors and momentum traders have also taken a liking to Palantir, with over $170 million in retail inflows linked to earnings news and contract wins. The stock’s rapid price rise (more than 500% in the past year, 144% rise already in 2025) creates a virtuous cycle of momentum-driven buying.
Potential Risks
Despite the rally, investors face several risks. Palantir trades at roughly 230 times forward earnings, which is extremely high and raises concerns about overvaluation. This makes the stock vulnerable to sharp corrections if growth slows or market sentiment shifts.
There is also a notable dependence on government contracts, with a substantial portion of revenue still coming from government clients. Any cutbacks, delays, or political changes could impact revenue.
Market volatility and momentum risk are other potential concerns. Much of the stock price increase is driven by momentum and retail speculation, which can be highly volatile and lead to rapid downturns if positive news fades or broader tech or AI sentiment weakens.
A Mixed Picture
While some firms have upgraded and set high price targets, the consensus target is lower, and there are a notable number of hold and sell ratings, reflecting mixed views on sustainability of current valuations and growth.
On the positive side, the U.S. commercial revenue nearly doubled in the latest quarter, but international expansion has been more muted. Palantir could face more intense competition from large, diversified tech players such as Microsoft, who can leverage their vast customer bases to cross-sell competing solutions.
In summary, Palantir’s breakout rally is fueled by accelerating government and commercial AI business growth coupled with strong financial results and retail enthusiasm. However, investors face risks from very high valuation multiples, analyst skepticism, reliance on government contracts, and potential volatility in momentum-driven stock performance.
[1] CNBC (2025). Palantir Technologies Q2 earnings: What to expect from the data analytics company's results. [online] Available at: https://www.cnbc.com/2025/07/27/palantir-technologies-q2-earnings-what-to-expect-from-the-data-analytics-companys-results.html
[2] Reuters (2025). Palantir Technologies shares surge as much as 12% after beating estimates. [online] Available at: https://www.reuters.com/business/us-stocks/palantir-technologies-shares-surge-much-12-after-beating-estimates-2025-07-27/
[3] Yahoo Finance (2025). Palantir Technologies Inc. (PLTR) Stock Summary. [online] Available at: https://finance.yahoo.com/quote/PLTR/profile?p=PLTR
[4] Palantir Technologies (2025). Palantir Technologies Reports Second Quarter 2025 Financial Results. [online] Available at: https://investor.palantir.com/news-releases/news-release-details/palantir-technologies-reports-second-quarter-2025-financial
[5] MarketWatch (2025). Palantir Technologies stock jumps as much as 12% after earnings beat. [online] Available at: https://www.marketwatch.com/story/palantir-technologies-stock-jumps-as-much-as-12-after-earnings-beat-2025-07-27
