The weight of expectations can be a heavy burden to bear. It’s not clear if Palantir Technologies (NASDAQ:PLTR) has gotten this memo.
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Indeed, the company has been on quite a roll, and doesn’t seem to be showing any signs of slowing down. Another major boost came just last week, as Palantir and the U.S. army agreed on a deal that could be worth up to $10 billion over the coming decade. Reflecting this strong performance, PLTR’s share price is up over 540% for the past twelve months.
Expectations are high once more as the company gears up to release its Q2 2025 numbers on Monday, August 4 after the market closes. The market is expecting Palantir to report $939.47 million in sales (Palantir itself has guided for $934 to $938 million), numbers which would represent year-over-year growth approaching 40%.
Will the company outpace projections yet again? One top investor known as Deep Value Investing believes the rip-roaring Palantir will succeed in doing so. However, the 5-star investor offers a word of caution going forward.
“Even though revenue could have a big upside from this contract, there is a risk of disappointment from a margin perspective,” explains Deep Value, who is among the top 4% of TipRanks’ stock pros.
The investor further explains that despite Palantir’s incredible run, it’s not all sunshine and rainbows. For instance, the company is struggling to propel commercial adoption outside of the U.S. – “[Palantir CEO Alex] Karp doesn’t have much hope in Europe (from a commercial perspective).”
When it comes to the rate of commercial growth in the U.S., this has indeed been astounding (71% year-over-year during Q1 2025). However, the so-called “total contract value” from this segment is $810 million, which the investor acknowledges pales in comparison to the very high price-to-earnings ratio of 687x that the company is trading at.
Though the U.S. army deal is clearly a big win – and provides the “ultimate confirmation” of Palantir’s technology – Deep Value worries that the agreement could decrease the company’s margins.
“While these contracts will support the revenue growth, currently in the mid-40s for the government segment, they will most likely pressure profitability,” Deep Value adds.
All that being said, the investor remains bullish on Palantir on the eve of the company’s Q2 earnings report. Deep Value will be eager to understand how quickly the $10 billion deal will translate into revenues, while also keeping a watchful eye on operating income guidance for the remainder of the year.
Summing it all up, Deep Value Investing is assigning a Buy rating for Palantir. (To watch Deep Value Investing’s track record, click here)
Wall Street is not quite as bullish. With 10 Hold ratings far outpacing 4 Buys and 3 Sells, which give PLTR a consensus Hold (i.e. Neutral) rating. PLTR’s 12-month average price target of $111.14 has a downside of ~28%. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.