Palantir Q1 earnings preview: can the AI surge sustain momentum?

When is Palantir set to report?

​Palantir Technologies is set to report its first quarter (Q1) 2025 earnings on Monday, 6 May 2025 at 6.05am AEDT, after the market closes.

Market watchers using trading platforms will be closely monitoring the reaction to Palantir's results, as tech stocks with artificial intelligence (AI) exposure have shown particular sensitivity to earnings reports in recent months.

​The Palantir share price has already demonstrated significant volatility ahead of the announcement, dropping by around 40% from its February high to its current April low. 

Palantir's Q1 2025 earnings expectations

• Earnings per share (EPS): $0.13, marking a 62% increase year-over-year (YoY)
• Revenue: expected to reach approximately $864 million, reflecting a 36% growth YoY.

Company backdrop

​The data analytics company has demonstrated consistent profitability over recent quarters, a significant evolution from its earlier years as a public company. This transformation has been largely driven by growing commercial adoption of its platforms, particularly in the AI space.

After reporting record financial metrics in the fourth quarter (Q4) of 2024, expectations are high for continued momentum in Q1. The company's guidance during its last earnings call suggested continued robust growth, but investors will be scrutinising whether Palantir can maintain its impressive trajectory.

Highlights from the previous quarter

• Adjusted free cash flow: $517 million
• Adjusted operating margin: 45%, the highest in its history. This remarkable profitability represents a dramatic transformation from the company's earlier years as a public entity.
• The net United States (US) dollar retention rate: 120%, indicating strong customer engagement and expansion of existing relationships. This metric provides insight into how successfully Palantir is growing revenue from its established customer base.

Gross margin trends will also be closely scrutinised, as Palantir has historically maintained software-like margins above 80%. Any compression in these margins could signal increased competition or changes in the business mix that might affect long-term profitability.

The company's substantial cash reserves and debt-free balance sheet provide significant financial flexibility. For investors considering share investing, Palantir's improving financial fundamentals represent an important consideration when evaluating the company against other high-growth technology stocks.

​Analyst sentiment and valuation considerations

Despite impressive growth metrics, analyst opinions on Palantir remain mixed. While some have raised their price targets following recent quarters of strong execution, concerns about the company's high valuation persist.

According to London Stock Exchange Group (LSEG) Data & Analytics, 2 analysts have a ‘strong buy’ recommendation, 3 have a ‘buy’, 15 have a ‘hold’, 3 have a ‘sell’, and 1 has a ‘strong sell’ recommendation (as of 23 April 2025).​

Palantir LSEG Data & Analytics chart

Palantir has a TipRanks Smart Score of ‘6 Neutral’ and is rated as a ‘hold’ by analysts with 3 ‘buy’, 12 ‘hold’ and 3 ‘sell’ recommendations (as of 23 April 2025).

Palantir TipRanks Smart Score chart

The disparity between analyst targets and the current share price highlights the polarised views on Palantir's prospects. Bulls point to the AI opportunity and improving financial metrics, while bears emphasise the lofty valuation relative to current fundamentals.

​Palantir trades at a significant premium to most software companies on conventional metrics like price-to-sales ratio. This premium valuation means the company has little room for disappointment in its quarterly reports, as even minor misses could trigger outsized share price reactions.

Key drivers

AI-driven growth

​Palantir's Artificial Intelligence Platform (AIP) has emerged as a significant growth driver, particularly in the US commercial sector, which saw a 64% YoY increase in Q4 2024. This platform, which enables organisations to integrate their proprietary data with large language models, has positioned Palantir favourably in the expanding AI market.

Strategic initiatives:

• Hosting regular "AIP bootcamps" to demonstrate platform capabilities
• High conversion rates reported from these events

Commercial expansion

​Commercial customer count is another critical metric to watch, as Palantir has been working to scale beyond its traditionally large enterprise and government focus. In previous quarters, the company reported a high double digit YoY increase in US commercial customers, and any acceleration or deceleration in this trend will likely impact market sentiment.

Government contracts

The company continues to secure substantial government contracts, including extensions with the US Army and Special Operations Command, contributing to a 45% YoY growth in US government revenue in Q4 2024. This segment remains a cornerstone of Palantir's business model.

These government contracts often have long sales cycles but result in substantial, recurring revenue once secured.

International expansion

• ​Slower pace compared to US segments
• Potential runway for further expansion in international markets

The geopolitical environment, including ongoing conflicts and global security concerns, potentially creates tailwinds for Palantir's government business. Management commentary on the pipeline for major government contracts could provide insight into future growth prospects.

​These government contracts often have long sales cycles but result in substantial, recurring revenue once secured. For investors using spread betting to speculate on Palantir's share price movements, understanding these business dynamics is crucial for evaluating the company's long-term prospects.

​What to watch for

Beyond the headline financial metrics, several specific areas will demand investor attention:

• Commercial customer acquisition costs and go-to-market strategy effectiveness
• Commentary on AIP adoption rates and customer feedback
• International expansion progress, particularly in Europe and Asia
• Continued growth in AI-driven revenue and sustained profitability

Palantir's outlook and guidance for the remainder of 2025 will likely have the most substantial impact on the stock's post-earnings performance. ​Palantir has typically provided conservative guidance, so any change in this approach could signal shifting management confidence.

Palantir technical analysis outlook

​The Palantir share price has been highly volatile of late and seems to be capped by its late March and mid-April highs at $98.17 - $98.99. If exceeded on a daily chart closing basis, the February all-time high at $125.41 should be back in the limelight.

Support can be spotted between the December-to-early February highs at $85.22 - $80.91, ahead of the 10 March low at $74.57.

Key support for the long-term uptrend consists of the January and current April lows at $66.12 - $63.40.

​For technical traders using trading signals, Palantir's price action around these key support levels could provide important clues about market sentiment ahead of the earnings release. The stock's high beta characteristics make it particularly responsive to both company-specific news and broader market trends.

​Were a weekly chart close below the $66.12 mid-January low to unfold, the Palantir share price would be expected to fall through its 200-day simple moving average (SMA) at $60.66 towards the October 2024 high at $45.14.

​Trading volumes have remained elevated during the recent pullback, indicating significant institutional activity.

​The stock's options market also shows heightened implied volatility heading into earnings, suggesting traders are anticipating a substantial move following the announcement.

​Palantir daily candlestick chart