Analyst updates Palantir stock forecast before key earnings

Palantir (PLTR) , the hot AI stock that's doubled this year, is making waves again.

The company has recently secured another contract with the U.S. Army worth up to $10 billion over the next ten years.

According to a release, Palantir will improve the Army's operational efficiency by creating a “comprehensive framework for the Army’s future software and data needs.”

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The deal consolidates multiple contracts into a single enterprise agreement, giving the Army more flexibility in purchasing software and services. It also reduces procurement delays and contract-related fees.

Palantir is known for providing AI-driven data analytics software to the U.S. government, military, and commercial clients. The stock soared 340% in 2024 as demand for AI infrastructure surged across sectors.

Investors are now watching closely ahead of the company’s second-quarter earnings report, which is set for August 4 after the bell.

Palantir reached an all-time intraday high of $160.89 on July 31.

Image source: Kevin Dietsch/Getty Images

What to watch for Palantir’s second quarter earnings

Three months ago, Palantir delivered robust earnings for the first quarter and issued a strong forecast for the second, yet the stock tumbled 12% on the following trading day.

Palantir's first-quarter revenue beat was primarily fueled by robust U.S. sales, which rose 55% year-over-year. U.S. commercial revenue jumped 71%, while government revenue grew 45%. U.S. revenue accounted for about 71% of the total.

“We are in the middle of a tectonic shift in the adoption of our software,” CEO Alex Karp said. “We are delivering the operating system for the modern enterprise in the era of AI. Consequently, we are raising our full-year guidance for total revenue growth to 36% and our guidance for U.S. commercial revenue growth to 68%.”

Palantir projects second-quarter revenue of $934 million to $938 million, surpassing the consensus estimate of $899.1 million.

Just days ahead of its second-quarter earnings report, Palantir was trading near record levels. On July 31, the stock reached an all-time intraday high of $160.89. It closed at $154.27 on August 1, weighed down by a broader market slump.

With that sharp surge, investors question whether Palantir’s valuation is running too far ahead of its fundamentals.

The stock currently trades at 277x forward earnings, well above other software providers like Microsoft (MSFT) , which is 34x, and Salesforce (CRM) , which is 22x.

Still, D.A. Davidson's head of technology research, Gil Luria, argued that Palantir is being driven up by “very loyal” individual investors who prioritize the company’s mission over its valuation.

Analyst bullish on Palantir stock before earnings

Wedbush reiterated an outperform rating and a price target of $160 for Palantir stock ahead of its earnings, according to a recent research note.

Analysts led by Daniel Ives said the recent deal with the U.S. Army represents an additional tailwind, which places Palantir in the sweet spot to benefit from “a tidal wave of federal spending on AI.”

“We continue to believe that Palantir’s unique AI software approach will be a positive growth catalyst as governments look to further increase efficiency with more software/lower headcount,” Ives wrote.

The analysts expect to hear more about this deal and strong AI-driven results when Palantir reports earnings.

More Palantir

This note follows Wedbush’s earlier update on July 10, when the firm raised its price target on the stock from $140 to $160.

“We believe Palantir has a ‘golden path to become the next Oracle' over the coming years and while the valuation is expensive today we see the Messi of AI as a core winner in the trillions of AI spend over the next few years,” Ives wrote.