From Morningstar: 2025-05-15 08:55:00

Palantir Technologies released its first-quarter earnings report on May 5, beating revenue expectations by 3% and achieving an all-time high contribution margin of 61%. Despite this, shares were down 9% in after-hours trading. The company continues to impress in the US government and commercial sectors, with revenue growth of 39% and adjusted operating margin of 44%.

Palantir trades at 73 times revenue, a nearly 400% premium over other AI software companies. The company’s US commercial customer base increased by 65% year over year, with larger deal sizes exceeding $1 million. However, future growth projections may not meet high market expectations, leading to uncertainty in stock movement and valuation.

Morningstar maintains a narrow moat rating for Palantir and raises the fair value estimate by 11% to $100 per share. The company’s strong financial position, with $1 billion in cash, $4.4 billion in marketable securities, and no debt, supports continued growth. The AI revolution and Palantir’s unique position in data analytics contribute to its long-term value proposition.

Palantir’s economic moat is based on switching costs and intangible assets, setting it apart from competitors in data analytics. The company’s financial strength, profitability, and healthy liquidity position position it well for future growth. However, high uncertainty remains due to the potential size of its total addressable market, impacting stock valuation and investor perception.

Bulls believe Palantir’s AI software is well-positioned for digitization and automation trends, offering efficiency enhancements for businesses. Bears point to market limitations based on Western ethos, potential barriers to entry in the AI industry, and concerns over the company’s dual-class share structure. The stock’s future performance hinges on market perception and the company’s ability to capitalize on growth opportunities.



Read more at Morningstar: After Earnings, Is Palantir Stock a Buy, a Sell, or…