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

Palantir's Q1 2025 earnings expectations

​Palantir Technologies is set to report its first quarter (Q1) 2025 earnings on Monday, 5 May 2025, after the market closes.

​Analysts anticipate earnings per share (EPS) of $0.13, marking a 62% increase year-over-year (YoY), with revenue expected to reach approximately $864 million, reflecting a 36% growth from the same period last year.

​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 artificial intelligence (AI) space.

​After reporting record financial metrics in quarter four (Q4) 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.

​Market watchers using trading platforms will be closely monitoring the reaction to Palantir's results, as tech stocks with 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.

​AI-driven growth and commercial expansion

​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.

​The company has been hosting regular "AIP bootcamps" to demonstrate the platform's capabilities to potential clients, reporting impressive conversion rates from these events. Investors will be keen to see if this strategy continues to translate into accelerating commercial revenue growth.

​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.

​For those considering the implications for their portfolios, understanding how AI is transforming the technology landscape is essential. Options trading could provide strategies to position for volatility around the earnings announcement without necessarily committing to a directional view.

Government contracts and international expansion

​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.

​International government relationships have also been expanding, though at a slower pace than the US segments. Investors will be watching for any acceleration in international growth, which could provide additional runway beyond the company's home market.

​The geopolitical environment, including ongoing conflicts and security concerns globally, 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.

​Financial metrics and profitability

​Palantir reported a record adjusted free cash flow of $517 million in Q4 2024, with an adjusted operating margin of 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 dollar retention rate stood at 120% in the previous quarter, 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 LSEG Data & analytics, 2 analyst have a ‘strong buy’ recommendation, 3 a ‘buy’, 15 a ‘hold’, 3 a ‘sell’ and 1 a ‘strong sell’ recommendation (as of 23/04/2025).

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 23/04/2025).

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.

​For those using CFD trading to take positions on Palantir, this valuation context is important to consider when assessing potential price volatility around the earnings announcement. The stock's high beta and AI association make it particularly susceptible to sharp movements.

​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-to-$98.99. If exceeded on a daily chart closing basis, the February all-time high at $125.41 should be back in the limelight.

​Palantir daily candlestick chart 

​Support can be spotted between the December-to-early February highs at $85.22-to-$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-to-$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.

​Key factors to watch in Palantir's earnings report

​Beyond the headline financial metrics, several specific areas will demand investor attention. Commercial customer acquisition costs and the efficiency of Palantir's go-to-market strategy will be crucial for evaluating the sustainability of growth.

​Commentary on AIP adoption rates and customer feedback will provide insight into Palantir's competitive positioning in the rapidly evolving AI market.

​Management's discussion of how customers are using the platform across different industries could highlight emerging opportunities.

​International expansion progress, particularly in Europe and Asia, represents an important growth vector. Any acceleration in these markets could significantly expand Palantir's addressable market beyond its core US strength.

​The company'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.

​How to trade Palantir's earnings announcement

1. ​Do your research on Palantir's business model, recent performance, and the broader AI sector to inform your trading decisions.
2. ​Choose whether you want to trade or invest based on your timeframe and risk tolerance.
3. ​Open an account with us if you don't already have one.
4. ​Search for "Palantir" or the ticker "PLTR" in our platform or app.
5. ​Place your trade, ensuring you have appropriate risk management strategies in place, such as stop losses, to protect against unexpected market movements.

​Earnings announcements often create heightened volatility, presenting both opportunities and risks. Using a demo account to practice your strategy before committing real capital can be a prudent approach, especially for high-volatility stocks like Palantir.

​For those interested in longer-term exposure, our share dealing services provide a way to build positions as part of a diversified portfolio. Remember that while AI-focused companies like Palantir offer significant growth potential, they also come with elevated volatility and valuation risks.

​As Palantir prepares to release its Q1 2025 earnings, investors will closely watch for continued growth in AI-driven revenue and sustained profitability. The company's ability to meet or exceed expectations could play a crucial role in shaping its stock performance in the coming months.