TLDR:
- Palantir (PLTR) stock hit $119.16 on Feb 15, up 42% since Feb 3 earnings release
- Company reported 36% year-over-year revenue growth and 69.8% FCF growth in Q4 2024
- Stock has risen 585% since January 2024, making it the S&P 500’s best performer
- Current forward price-to-sales ratio exceeds 55, historically high for software stocks
- Historical data shows software stocks with similar valuations eventually declined by 70%+
Palantir Technologies (PLTR) stock reached new heights on Friday, February 15, closing at $119.16, marking a 42% increase since its February 3 earnings announcement. The company’s market capitalization now stands at $271 billion, following an extraordinary 585% rise since January 2024.
The data analytics company reported fourth-quarter results that exceeded market expectations, with revenue growing 36% year-over-year to $827.5 billion, accelerating from the 30% growth seen in Q3. More notably, adjusted free cash flow (FCF) surged 69.8% to $517.4 billion compared to the same quarter last year.
Palantir’s FCF margins continued to expand, reaching 63% in Q4 2024, up from 60% in the previous quarter. This improvement in margins demonstrates the company’s increasing operational efficiency and ability to convert revenue into cash profit.
Analysts project Palantir’s revenue to reach $3.78 billion in 2025, representing a 31.9% increase from 2024’s $2.87 billion. By 2026, revenue expectations stand at $4.76 billion, indicating continued strong growth prospects.
Analyst’s Price Targets
Wall Street analysts have scrambled to revise their price targets upward, though many still lag behind the current stock price. The average price target from 23 analysts surveyed by Yahoo! Finance stands at $84.69, while AnaChart reports an average of $119.84 from 15 actively covering analysts.
Bank of America Merrill Lynch analyst Mariana Perex Mora stands out with the highest price target of $125, recently raised from $21 following the earnings release. This marks the only major analyst target currently above the stock’s trading price.
The International Data Corporation (IDC) has ranked Palantir as the market leader in decision intelligence software. Forrester Research has also recognized the company’s artificial intelligence platform (AIP) as a technology leader, ranking it above similar solutions from major tech companies.
However, the stock’s rapid ascent has pushed its forward price-to-sales ratio above 55, making it one of the most expensive software stocks of the past decade. Historical data suggests this level of valuation may be difficult to maintain.
Research indicates only five software companies have achieved forward price-to-sales ratios above 40 in the past decade: Asana, Confluent, Snowflake, UiPath, and Unity Software. Among these, only Snowflake briefly exceeded a ratio of 50, peaking near 60 in November 2021.
All five companies subsequently experienced declines of more than 70% from their peak valuations and remain at least 50% below their record highs today. This historical pattern raises questions about Palantir’s current valuation sustainability.
IDC estimates AI platform spending will grow at 40% annually through 2028, positioning Palantir to potentially benefit from continued market expansion. The company’s current revenue growth rate of 36% year-over-year, while strong, is notably lower than Snowflake’s growth rate when it achieved similar valuation levels.
Options markets reflect the stock’s volatility, with put options showing high premiums. The March 7 expiration $113 strike price puts carry a premium of $3.55, representing a 3.14% yield over three weeks.
For the near term, Palantir’s stock continues to trade actively, with recent daily volume averaging 85.7 million shares. The stock’s 52-week range spans from $20.33 to $120.67, highlighting the magnitude of its recent climb.
