Last year’s top performing stock just keeps charging in 2025.
Palantir Technologies (NASDAQ:PLTR), the top performing large-cap stock of 2024, just continues to charge like a raging bull in 2025.
The leading AI stock posted blowout fourth quarter earnings on Monday after the closing bell, which sent the stock surging. As of Tuesday morning, after the opening bell, Palantir stock skyrocketed about 23% to an all-time high of over $103 per share.
To get a sense of what type of run that Palantir has been on, the stock returned 341% in 2024 and is up about 31% year-to-date so far in 2025. Over the past 12 months it has climbed an astounding 492%.
And over the past three years it has posted an average annualized return of 103% per year. Further, since its inception in September 2020, it has an average annualized return of 73%. It has been on a rocket ship for four and a half years. Its ridiculous growth launched Palantir into the S&P 500 just this past October.
Astounding results
Like another juggernaut, NVIDIA, Palantir’s success has been fueled by the AI boom. Its business is literally AI, as it makes software for commercial and government customers that allows them to gather massive amounts of data, analyze it, and develop generative AI models to improve decision-making.
In the fourth quarter, Palantir generated revenue of $828 million, a 36% increase over the previous year’s fourth quarter. Analysts had estimated revenue of $776 million.
Net income dropped about 20% to $77 million, or 3 cents per share. The numbers were down because the company gave out stock appreciation rights (SAR) to its employees, which is compensation tied to the performance of the stock price for a pre-determined time. Net income would have been $165 million without this one-time SAR payment.
On an adjusted basis, the $165 million in net income, or 14 cents per share, is 75% higher than the same quarter a year ago. It is also ahead of analysts’ estimates of 11 cents per share.
U.S. revenue grew 52% year-over-year. Commercial revenue, which comes primarily from corporate clients, rose 64% in the quarter to $214 million. U.S. government revenue, which comes from government clients, grew 45% year-over-year to $343 million. The firm closed 129 deals of at least $1 million, 58 deals of at least $5 million, and 32 deals of at least $10 million in Q4.
For the full year, revenue shot 29% higher to $2.87 billion, with commercial revenue up 54% and government revenue rising 30%. Net income was $462 million, or 21 cents per share, up more than double from 10 cents per share in 2023.
“Our business results continue to astound, demonstrating our deepening position at the center of the AI revolution. Our early insights surrounding the commoditization of large language models have evolved from theory to fact,” Alexander Karp, co-founder and CEO of Palantir, said. “I would also like to congratulate Palantirians for their extraordinary contributions to our growth. They have earned every bit of the compensation from the delivery of their market-vesting stock appreciation rights (SARs).”
AI juggernaut
The outlook for 2025 shows that the firm is not slowing down. In Q1, Palantir is targeting revenue of $858 million to $862 million, which would be up 3% to 4% from Q4. Adjusted income from operations is expected to be $354M to $358M, down from $373M in Q4.
For the full year 2025, Palantir projects revenue to be in the range of $3.74B and $3.76B, which would be 30% above 2024 levels. Commercial revenue is targeted to grow at least 54% to $1.08B. Further, adjusted income from operations is guided to fall between $1.55B and $1.57B — a 37% gain. Additionally, adjusted free cash flow is targeted at $1.5B to $1.7B, up from $1.25B in 2024.
“This is not an incremental advance or marginal acceleration of our business. This is a new phase,” Karp wrote in the shareholder letter. “The business we have built has now developed its own internal momentum and strength, its own interior life and forms of untamed organic growth, with the output that we are seeing far surpassing what we are investing. A software juggernaut has indeed emerged.”
The crazy growth for Palantir has raised its valuation to a ridiculously high 440 P/E ratio. Palantir has managed to defy gravity for most of the past four-plus years but investors should be very wary of that P/E ratio, especially after another spike like this.