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On Monday, Palantir Technologies (Nasdaq: PLTR) reported its Q1 2025 earnings ending March 31st. Despite a strong revenue growth of 39% yoy to $883.9 million, the AI-powered software intelligence company failed to excite investors.

Since the market close on Monday to its lowest point on Tuesday, PLTR shares deflated from $123.77 to $105.48, marking a 14.7% drop. At press time, however, PLTR stock is showing signs of recovery, priced at above $107 per share.

Although Palantir matched expected earnings per share (EPS) forecast of $0.13 (adjusted), the hype surrounding the company appears to have set a higher bar. Nonetheless, PLTR shares greatly outperformed the S&P 500 index year-to-date, at +42% vs -4.2% respectively.The question is, is this trend likely to continue given the recent Palantir stock dip?

Palantir Raised Own Expectations

Although Palantir still gains the bulk of its revenue from US government contracts, at $373 million, US commercial revenue, at $255 million, actually outpaced government deals at 71% vs 45% yoy respectively.

Overall, the US-based commercial sector brought in $2.32 billion in remaining deal value (RDV), which is up 127% yoy. For total revenue, against the LSEG consensus of $862.8 million, Palantir outperformed at $883.9 million.

With these results, the company raised FY2025 revenue from the $3.74 – $3.76 billion range to new $3.89 – $3.90 billion. Yet, even with raised expectations, Palantir stock is still highly priced against its Software-as-a-Service (SaaS) peers. In January 2025, the price-to-earnings (P/E) ratio for the application software sector was 57.31.

That is in line with Datadog’s forward P/E of 58.14, as a subscription-based monitoring and analytics platform. Palantir is still in a category of its own with an exceedingly high forward P/E of 232.56. Yet, this makes sense when looking at the big picture.

Palantir: Beyond SaaS

In early February, we explained in greater detail why Palantir should be considered as dark horse AI stock. Specifically, that the company provides the cutting edge of governance technology, be it used for actual governments or corporations.

This is an emergent sector that is difficult to pin down as it blurs the lines between the two, more commonly referred to as private-public partnership (PPP). The world’s largest and most influential NGO, Tony Blair Institute for Global Change (TBI), has been the primary driver of such a novel governance regime, especially as it relates to AI.

In turn, TBI’s initiatives are in sync with the wider Big Tech scene in the US. Namely, with Larry Ellison, the executive chairman of Oracle. Ellison is one of the key figures behind the Stargate project, purportedly building up a $500 billion pool to fund the necessary AI infrastructure in collaboration with OpenAI and SoftBank.

By having them at the White House announce the project in January, President Trump put forward his support. The fact that the announcement came so soon after Trump’s inauguration means that the project was already in motion and the consensus had been reached.

All sharing the same governance vision, Oracle (NASDAQ: ORCL) and Palantir partnered in early April 2024. Oracle has experience in distributed cloud architecture and AI infrastructure, while Palantir delivers on “decision acceleration platforms” in order to “outpace adversaries”.

In this light, Palantir should be viewed as the governance operating system provider. And in a similar fashion to Microsoft’s OS, Palantir now has the first mover advantage. Should that eventually extend to a trillion company like Microsoft is anyone’s guess, but the moves are set in motion for that scenario to materialize.

Palantir’s New Price Target

Following Palantir’s Q1 2025 earnings, seven brokerage firms raised their price targets at press time. According to WSJ’s forecasting data, the average PLTR price target is $96.26 against the current price of $108.33 per share.

The bottom price target is $40 while the ceiling for PLTR stock is $130. Although the company’s software business model is highly resistant to tariff concerns, it remains the case that tariffs inject wider uncertainty into the stock market.

Nonetheless, it would be prudent in such market-dip scenarios to put PLTR stock at the top of the watchlist.

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