Honestly, trying to peg a number on Palantir feels like trying to catch a lightning bolt with a pair of plastic tweezers. If you've spent even five minutes on financial Twitter or scrolled through a Robinhood feed lately, you know the vibe. People are either convinced Alex Karp is a wizard building the "operating system of the modern world," or they’re screaming about a valuation bubble that makes the dot-com era look like a clearance sale.
But 2025 isn't just another year for PLTR. It's the year the training wheels finally came off.
We just saw the company close out a year where its stock price shot up by roughly 135% to 150%, depending on which week you checked your brokerage app. By the end of 2025, Palantir had officially become the most expensive stock in the S&P 500. Not just "pricey." We're talking a price-to-sales (P/S) ratio that touched a staggering 118x and settled around 100x. To put that in perspective, the next closest runner-up in the index was AppLovin at a "measly" 40x.
The 2025 Breakdown: What Actually Happened?
Most analysts started the year skeptical. They were wrong.
The big story wasn't just the government contracts, which everyone expects from a company that basically grew up in the CIA's backyard. The real shocker was the U.S. commercial segment. By Q3 2025, Palantir’s U.S. commercial revenue hadn't just grown; it had exploded by 121% year-over-year.
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They crossed a $1 billion annual run rate in that segment alone.
This happened because of AIP—their Artificial Intelligence Platform. Think of it as the connective tissue between a company’s messy, siloed data and the shiny new LLMs (Large Language Models) everyone is obsessed with. Instead of months-long sales cycles, they started running "bootcamps." They bring engineers into a room, show them how to solve a massive supply chain bottleneck in five days instead of two years, and then hand them the bill.
It worked.
Revenue and the "Rule of 40" on Steroids
In the world of SaaS, the "Rule of 40" is the gold standard—you want your growth rate plus your profit margin to equal 40 or higher.
Palantir didn't just hit 40. In late 2025, they posted a Rule of 40 score of 114%. That is, frankly, unheard of for a company with a market cap this size. Revenue for the full year 2025 landed right around $4.4 billion.
- Q1 2025 Revenue: $884 million (39% growth)
- Q3 2025 Revenue: $1.18 billion (63% growth)
- Customer Count: Jumped 45% year-over-year
Palantir Stock Prediction 2025: The Price Targets
So, where does the stock go from here as we stare down the barrel of 2026? Wall Street is split right down the middle, and the gap between the bulls and the bears is wide enough to fly a Reaper drone through.
Mariana Perez Mora at Bank of America has been one of the loudest bulls, recently reiterating a price target of $255. On the other side of the fence, you have folks at RBC Capital who have slapped an "Underperform" rating on it, worried that the valuation has disconnected from reality.
Then there’s the consensus.
If you look at the median analyst target, it sits around $188 to $200. Given that the stock traded as high as $207 in November 2025 before a slight pullback, these targets suggest a period of "cooling off" or consolidation.
Why the Bears Might Be Right (For Once)
History is a mean teacher. Every single software company that has ever traded at a P/S ratio over 100 has eventually seen a massive drawdown. We're talking 60% to 80% drops.
Snowflake did it. SentinelOne did it.
The math is simple: to justify a 100x multiple, you almost have to double your revenue every single year. While Palantir’s 63% growth is incredible, it’s not 100%. If that growth rate dips to 40% in 2026—which is what many analysts like those at Citigroup are modeling—the market might decide it’s no longer willing to pay such a massive premium.
The "Agentic AI" X-Factor
But here is what most people are missing. Palantir isn't just selling chatbots. They are moving into "Agentic AI."
According to the 2025 Wisdom of Crowds study by Dresner Advisory Services, Palantir is now ranked #1 in the Agentic AI market. This isn't just about answering questions; it's about AI agents that can actually execute tasks.
Think about a supply chain agent that doesn't just tell you a shipment is late but automatically reroutes three other trucks, updates the warehouse schedule, and emails the customer—all without a human clicking a button.
That is why CEO Alex Karp keeps calling the growth "otherworldly." He’s not looking at the stock price; he’s looking at the fact that they’ve become the "operating system" for companies like Wendy’s and major hospital systems.
The Trump Era and Defense Spending
We also have to talk about the political landscape. The current administration has leaned heavily into Palantir’s software for both border security and military modernization.
Defense budgets are shifting.
The focus is moving away from just building more tanks and toward "software-defined warfare." This is Palantir's bread and butter. Their government revenue grew 52% in Q3 2025, hitting $486 million. With the renewed urgency in Western Europe to modernize defense tech, that government side of the house might have a second wind that keeps the bears at bay.
Valuation: The Elephant in the Room
Let's be real for a second. At $180 or $200 a share, you aren't buying Palantir based on what it's doing today. You’re buying it based on the idea that in five years, it will be as essential to a corporation as Microsoft Excel or AWS.
If you're a long-term believer, the "absurd" valuation is just the price of admission for a generational winner. If you're a swing trader, you're playing a very dangerous game of musical chairs.
Actionable Steps for Investors
If you're holding PLTR or thinking about jumping in, don't just follow the hype.
Watch the "Rule of 40" score. If that number starts to drift down toward 60 or 50, it means the hypergrowth phase is slowing, and the stock price will likely follow.
Keep an eye on U.S. Commercial TCV (Total Contract Value). In Q3 2025, this hit $1.31 billion, up 342%. This is the leading indicator. It tells you what revenue will look like six to twelve months from now. If TCV starts to flatten, the party is over.
Diversify your AI exposure. Don't put your whole life savings into a stock trading at 100x sales. Look at companies like BigBear.ai (BBAI) or even the "boring" picks like Microsoft that provide the infrastructure Palantir runs on.
Basically, Palantir is a beast, but it’s a volatile one. It has defied every prediction for two years straight, and while the fundamentals are stronger than they've ever been, the price tag is finally catching up to the story.
Next steps for you:
- Check Palantir’s most recent 10-Q filing specifically for "Remaining Performance Obligations" (RPO) to see the guaranteed backlog.
- Compare the current P/S ratio against the 5-year average to see how far it’s drifted from its own historical norms.
- Set a trailing stop-loss if you've enjoyed the 150% run-up; locking in gains is never a bad move when valuations hit triple digits.