Deep Dive Analysis: Is Palantir Technologies (PLTR) a Worthy Long-Term Investment?

This comprehensive analysis evaluates Palantir Technologies (PLTR) as a long-term investment opportunity, focusing on its financial performance from 2015 to 2024, its 2025 business results, competitive position, and valuation. Adopting a value-oriented perspective inspired by Warren Buffett, the report determines whether PLTR is worth buying at its current price of $131.61 (as of June 4, 2025), why, and identifies a reasonable purchase price. Additionally, it recommends similar potential stocks in the market.

Financial Performance (2015–2024)

Palantir Technologies went public via a direct listing on September 30, 2020, so publicly available financial reports are limited to 2020–2024. However, some financial data for 2018–2019 is available from private company filings or third-party sources like MacroTrends. Data for 2015–2017 is not publicly available due to Palantir’s private status during that period. Below is a summary of key financial metrics from 2018 to 2024:

Year	Revenue ($M)	Gross Profit ($M)	Operating Income ($M)	Net Income ($M)
2018	595	430	-623.44	-580.03
2019	743	500	-576.44	-579.65
2020	1,093	740	-1,173.68	-1,166.39
2021	1,542	1,202	-411.05	-520.38
2022	1,906	1,497	-161.20	-371.09
2023	2,225	1,794	120	217
2024	2,866	2,300	310	468

• Revenue Growth: Revenue grew from $595 million in 2018 to $2,866 million in 2024, a CAGR of approximately 40%. This reflects strong demand for Palantir’s AI-driven platforms, Gotham and Foundry, across government and commercial sectors.

• Gross Margin: Improved from 72.3% in 2018 to 80.3% in 2024, indicating better cost management and economies of scale.

• Operating Income: Transitioned from significant losses (-$1,173.68 million in 2020) to positive operating income of $120 million in 2023 and $310 million in 2024, showing improved operational efficiency.

• Net Income: Palantir was unprofitable until 2023, when it achieved a net income of $217 million, growing to $468 million in 2024. This shift to profitability is a key milestone for long-term investors.

• Key Insight: Palantir’s robust revenue growth and recent profitability highlight its financial progress, making it an attractive candidate for long-term investment despite earlier losses.

2025 Business Performance (Q1 2025)

Palantir’s Q1 2025 performance, as reported in its Q4 2024 earnings release, demonstrates continued momentum:

• Revenue: $828 million, up 36% year-over-year and 14% quarter-over-quarter.

• U.S. Commercial Revenue: $214 million, up 64% year-over-year, reflecting strong private-sector adoption.

• U.S. Government Revenue: $343 million, up 45% year-over-year.

• Net Income: $79 million (GAAP, 10% margin), $165 million excluding stock-based compensation (20% margin).

• Adjusted Free Cash Flow: $517 million, with a 63% margin, indicating strong cash generation.

• Customer Growth: Total customer count grew 43% year-over-year, with U.S. commercial customers up 13% quarter-over-quarter.

• 2025 Guidance: Full-year revenue expected to grow 31% to approximately $3.75 billion.

Key Developments:

• AI Platform (AIP): Palantir’s Artificial Intelligence Platform has driven significant commercial growth through bootcamps that accelerate customer acquisition.

• Strategic Partnerships: Collaborations with Microsoft, AWS, and others enhance Palantir’s ecosystem and market reach.

• Key Insight: Palantir’s strong Q1 2025 performance, particularly in the commercial sector, underscores its ability to capitalize on AI demand, supporting its long-term growth potential.

Business Model and Competitive Advantages

Palantir builds software platforms (Gotham and Foundry) that integrate and analyze complex data sets for government and commercial clients. Its business model is characterized by:

• Closed-Loop Network: Palantir controls its software ecosystem, enabling tailored solutions and high margins, as noted by Investopedia.

• Dual Market Focus: Serves government agencies (e.g., defense, intelligence) and commercial enterprises (e.g., healthcare, finance), diversifying revenue streams.

• AI Leadership: Palantir’s platforms leverage AI for predictive analytics, fraud detection, and operational efficiency, positioning it as a leader in the AI market.

• High Customer Retention: Long-term contracts with government and large enterprises ensure stable revenue, per TradingView.

Competitive Moat:

• Proprietary technology and expertise in handling sensitive data.

• Strong relationships with government agencies, including high-profile contracts (e.g., U.S. Department of Defense).

• Expanding commercial presence through AIP bootcamps and partnerships.

Key Insight: Palantir’s unique closed-loop model and AI expertise create a strong competitive moat, making it resilient to competition and attractive for long-term investment.

Growth Prospects

Palantir operates in the rapidly growing AI and data analytics market, projected to expand significantly over the next decade. Key growth drivers include:

• AI Market Expansion: The global AI market is expected to grow at a CAGR of over 30%, driven by demand for data-driven decision-making.

• Commercial Growth: U.S. commercial revenue grew 54% in 2024, with 221 commercial customers, up 55% year-over-year.

• Global Expansion: Increasing adoption in Europe and Asia, supported by partnerships like Palantir Japan with SOMPO Holdings.

• Innovation: Continuous investment in R&D (e.g., $560.7 million in 2020) enhances platform capabilities, per SEC 2020 10-K.

Risks:

• Competition: Faces competition from Snowflake, Datadog, and traditional tech giants like Microsoft and AWS.

• Regulatory Challenges: Government contracts expose Palantir to geopolitical and regulatory risks.

• High Valuation: The stock’s high P/E ratio (622) makes it vulnerable to market corrections if growth slows.

Key Insight: Palantir’s growth prospects are robust, driven by AI adoption and commercial expansion, but investors must weigh the risks of its high valuation and competitive landscape.

Current Valuation

• Stock Price: $131.61 (as of June 4, 2025).

• Market Cap: $291.19 billion.

• P/E Ratio: 622 (based on 2024 net income of $468 million and 2.213 billion shares outstanding).

• Forward P/E Ratio: Assuming 2025 net income of $702 million (50% growth), EPS ≈ $0.317, forward P/E ≈ 415.

• Price-to-Sales (P/S) Ratio: 101.5 (market cap divided by 2024 revenue of $2.866 billion).

• Price-to-Book (P/B) Ratio: Estimated book value per share ~$2.50 (based on 2024 equity data), P/B ≈ 52.6.

• PEG Ratio: 5.37 (P/E 622 divided by 2024 earnings growth rate of 115.7%).

Analyst Sentiment:

• Analyst price targets range from $75 to $175, with an average of $125.50, suggesting slight downside from the current price, per Nasdaq.

• Ratings vary from “Hold” to “Buy,” reflecting mixed views due to valuation concerns.

Comparison with Peers:

• Datadog (DDOG): Revenue $2.835 billion, net income ~$200 million (estimated), P/E ~14, P/S ~10.

• Snowflake (SNOW): Revenue $3.626 billion, net loss $1.456 billion, P/S ~15.

• ServiceNow (NOW): Revenue $10.984 billion, net income ~$1 billion (estimated), P/E ~50.

Key Insight: Palantir’s valuation is extremely high, with a P/E of 622 and P/S of 101.5, far exceeding peers. This reflects high growth expectations but introduces significant risk if growth slows.

Warren Buffett’s Perspective

Warren Buffett typically seeks companies with strong competitive moats, predictable earnings, and reasonable valuations. Palantir’s closed-loop model and leadership in AI analytics align with Buffett’s preference for businesses with durable advantages. However, its high P/E ratio and historical volatility might deter him, as he prefers companies with stable earnings and lower valuations. Buffett’s Berkshire Hathaway has not invested in PLTR, likely due to its speculative valuation, but the company’s recent profitability and growth trajectory could appeal to value investors if purchased at a lower price.

Is PLTR Worth Buying for Long-Term Investment?

Yes, Palantir Technologies is worth considering for long-term investment due to:

• Robust Growth: 40% revenue CAGR from 2018–2024, with 31% projected for 2025.

• Profitability: Achieved net income of $468 million in 2024, up from $217 million in 2023.

• Market Leadership: Strong position in AI and data analytics, with high-profile government and commercial clients.

• Strategic Partnerships: Collaborations with Microsoft and AWS enhance its ecosystem.

However, the high valuation (P/E 622, P/S 101.5) introduces risks. Investors should:

• Assess Risk Tolerance: The stock’s volatility and high multiples make it suitable for growth-oriented investors.

• Consider Diversification: Avoid allocating a large portfolio portion to PLTR due to its speculative nature.

Reasonable Buy Price

• Current Price: $131.61.

• Historical P/E Approach: Given Palantir’s recent profitability, a P/E of 100 (more reasonable for high-growth tech) with 2024 EPS of $0.2115 suggests a price of $21.15, far below the current price. For 2025 EPS of $0.317 (assuming 50% growth), a P/E of 100 yields $31.70, still low.

• Analyst-Based Approach: Average price target of $125.50 suggests the stock is fairly valued, with potential upside to $175.

• Recommended Buy Range: Below $100, ideally $90–$100, to reduce the P/E to ~473, offering a margin of safety. The current price of $131.61 is acceptable for growth investors but carries higher risk.

Similar Potential Stocks

For investors seeking high-growth opportunities in enterprise software and data analytics, consider:

1. Datadog (DDOG):

   • Business: Cloud-based monitoring and security platform.

   • Financials: Revenue $2.835 billion (2024), net income ~$200 million (estimated).

   • Valuation: P/E ~14, P/S ~10.

   • Why Similar: Profitable, high-growth, and focused on cloud infrastructure, complementing Palantir’s analytics focus.

2. ServiceNow (NOW):

   • Business: Digital workflow solutions for enterprises.

   • Financials: Revenue $10.984 billion (2024), net income ~$1 billion (estimated).

   • Valuation: P/E ~50, P/S ~15.

   • Why Similar: Mature, profitable, and growing in enterprise software, with a broader market presence.

Key Insight: Datadog is the closest comparable due to its profitability and reasonable valuation, while ServiceNow offers stability for investors seeking a larger, established player.

Recommendation

Palantir Technologies is a compelling long-term investment for those who believe in its AI-driven growth story. Its strong revenue growth, recent profitability, and leadership in data analytics make it attractive, but the high valuation requires caution. Buying at the current price of $131.61 is suitable for growth-oriented investors, while conservative investors should wait for a pullback to $90–$100. Diversify investments to mitigate risk, and consider similar stocks like Datadog and ServiceNow for balanced exposure to the enterprise software sector.

Key Citations

• Palantir Technologies Financial Statements 2018-2025

• Palantir Q4 2024 Earnings Release

• Palantir 2020 10-K Filing

• Datadog Revenue 2018-2025

• Snowflake Revenue 2020-2025

• MongoDB Revenue 2017-2025

• ServiceNow Revenue 2010-2025

• Palantir IPO Details

• Palantir 2024 10-K Report

• Palantir Earnings and Forecasts