Many investors argue the stock is overvalued and that competition from AI labs is intensifying.
- Despite blowout results in the last few quarters, PLTR stock has remained pressured.
- Analysts expect Palantir’s Q2 revenue to rise to $1.81 billion, following a record 85% surge in Q1.
- Stocktwits sentiment for PLTR was ‘neutral.’
Shares of Palantir Technologies, Inc. rose 1.5% in overnight trading ahead of Monday, as investors brace for second-quarter financial results from the AI data analytics company against a backdrop that is anything but straightforward.
Although Palantir has issued strong results in the last several quarters – and faces high expectations this time as well – the stock has been pressured over the past year due to a range of factors.
Many investors argue the stock is overvalued and that competition from AI companies such as Anthropic and OpenAI is intensifying, even as prominent commentators such as Michael Burry have pointed to alleged inconsistencies in the company’s accounting and warned of a sharp selloff. PLTR stock is down 41% from its peak last November.
That’s despite Palantir earning handsome sums from the U.S. government as the U.S.-Israeli war with Iran rages on. The mismatch in the financials and the stock creates a complicated setup heading into the earnings report.
Palantir Q2 Earnings: What Wall Street Expects
Analysts expect Palantir’s second-quarter revenue to jump 81% year over year to $1.81 billion, which would be only the second time the company posts sales growth of more than 80%. Adjusted earnings are projected to surge 116% to $0.35 per share, which would also be just the second time the company’s bottom line has more than doubled.
Oppenheimer expects U.S. government revenue to grow in the low-80% range and believes Palantir could raise its full-year growth outlook above the current 71% growth target. Citi expects the U.S. commercial business to rebound after slowing in the first quarter, while RBC Capital Markets remained more cautious, citing competition, customer churn, and questions about monetization of Palantir’s AI Platform.
“We see frontier artificial intelligence companies, or AI labs, as potential competitors, but we believe Palantir’s ontology stands out for its governance layers, auditability, and language model orchestration,” Morningstar said in a recent note.
“AI labs face difficult compute economics trade-offs without an ontological framework: enterprise-scale decisioning would require context windows, or “working memory,” in the trillions of tokens, while leading models today are capped at the low millions. Right now, we don’t believe AI labs have enough compute to spare.”
The research firm added that estimating Palantir’s total addressable market is difficult and the “imprecise measurement will drive a lot of share price volatility in the near term.”
Currently, 20 out of 32 analysts rate the stock ‘Buy’ or higher, 10 rate it ‘Hold,’ and two rate it ‘Sell’ or lower, per Koyfin. Their average price target of $182.20 implies a 40% upside to the stock’s last close.
Over the past years, Palantir has consistently delivered strong financial numbers and exceptional stock upside, making it one of the most watched stocks in the market.
However, noted investor Burry disclosed a short position in Palantir last November, a development that has pressured the company’s shares since. Burry has routinely flagged concerns around the company’s accounting practices and the hefty spending on CEO Alex Karp’s private jet.
Retail View On PLTR
Palantir was among the top five trending stocks on Stocktwits late Sunday. Retail sentiment edged up to ‘neutral’ over the past week as of Sunday, with traders split between a bullish thesis centered on Palantir’s expanding enterprise software business and concerns that the stock’s still-high valuation and lofty expectations could trigger a potential sell-the-news event.
“$PLTR definitely nervous for earnings. Love the company but doubling earnings isn’t good enough given the valuation,” said a trader.
Another wrote: “$PLTR has gone through a major reset this year, with expectations coming down from previous highs. The key question now is whether AI demand and deal momentum can continue supporting the long-term growth story. If buyers step back in, sentiment could shift quickly, but losing recent support would show sellers still have control.”
Traders expect a sharp post-results stock reaction, with a projected 11% move based on historical price action. PLTR stock gained a modest 5.5% in July, but remains 31% down year to date.
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