Today is the day Palantir Technologies (NASDAQ:PLTR) is set to unveil its Q2 2025 earnings report, and the excitement is palpable. The company has been on quite the heater since the beginning of January 2024, and is up over 800% during the past year and a half.
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The gains have been driven by strong performance, no doubt, with revenue growth continuing to surpass expectations. Enter into the mix a large number of retail investors who own Palantir – hovering around 45% of all shares – and there is a potent recipe for exuberance to run wild.
Just last week, Palantir gained another big-time shot in the arm, with the news that the U.S. military had agreed to a 10-year deal that could be worth up to $10 billion dollars. While revenues from this latest contract will only be reflected in ensuing quarters, the market is still expecting Palantir to deliver another double-digit jump today.
Indeed, if the company meets analyst forecasts of $939.47 million in revenues (the company has shared guidance in the range of $934 to $938 million), this would represent year-over-year growth approaching 40%.
One top investor known by the pseudonym Noah’s Arc Capital Management thinks that the past quarter was “super successful.” And yet, the 5-star investor is worried that the excitement has reached a fever pitch – meaning room for growth up ahead might be limited.
“Q2 could be a record quarter, but even blowout results may not drive the stock higher given current euphoria and valuation risk,” explains Noah’s Arc, who is among the top 2% of TipRanks’ stock pros.
In fact, the investor notes that PLTR just might breach the $1 billion revenue mark in Q2. However, its “extreme” valuation means that much of this growth is already assumed in its share price.
To demonstrate this dynamic, Noah’s Arc cites an analyst report that argues Palantir would need to deliver 40% annual growth in the coming four years just to maintain its current pricing levels.
The “peak euphoria” is causing Noah’s Arc to reevaluate, and the investor is therefore adopting a cautious approach.
“I am double-downgrading shares of Palantir from a strong buy to a hold,” concludes Noah’s Arc, who also emphasizes that “this is not a call to abandon Palantir outright, but rather a warning to be selective with entry points.” (To watch Noah’s Arc Capital Management, click here)
That’s right where Wall Street finds itself as well. Its 10 Hold ratings accompany 4 Buys and 3 Sells, giving PLTR a consensus Hold (i.e. Neutral) rating. PLTR’s 12-month average price target of $111.14 has a downside approaching 30%. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.