Why Palantir (PLTR) Is a Strong Buy in 2025

Palantir Technologies has been a standout performer in 2025, soaring significantly year-to-date on the strength of impressive earnings, AI-driven momentum, and major government contracts. Despite concerns about its high valuation, is this a tech bubble or a justified winner? The evidence suggests Palantir is capitalizing on AI with disciplined growth, profitability, and a strategic edge few competitors can match. Here's why Palantir is a strong buy for 2025, addressing bearish concerns and showing why they fall short.

Palantir's financials demonstrate a rare blend of rapid growth and profitability. First-quarter revenue showed strong year-over-year growth, followed by a record-breaking second quarter, particularly in the U.S. with commercial revenue surging. Full-year revenue for 2024 was robust, but 2025 is accelerating further. Unlike many high-growth tech firms, Palantir is profitable under standard accounting, with a notable net income increase in the second quarter and high operating margins. Cash flow is equally impressive, with significant free cash flow growth, far outpacing peers who often burn cash. Management has raised full-year revenue guidance, signaling confidence in sustained momentum. This combination of growth and financial discipline sets Palantir apart.

The core of Palantir's success lies in its AI Platform, which allows clients to run advanced AI models securely on private data, delivering insights for industries like supply chains, finance, healthcare, and defense. Strategic partnerships amplify this advantage. A groundbreaking collaboration with Microsoft integrates Azure's AI capabilities with Palantir's platform in classified defense environments, described by CTO Shyam Sankar as a major leap forward. Palantir also works with OpenAI and partners on responsible AI with Anthropic and Google. These partnerships are driving real contracts, such as deals with Fannie Mae for fraud detection, NATO for defense intelligence, and various U.S. federal agencies. Palantir's platforms, including Foundry for enterprises, Gotham for government, and Apollo for deployment, are proven and reliable. CEO Alex Karp is using AI internally to boost efficiency, aiming to multiply revenue with a lean workforce, showcasing a commitment to operational excellence.

Palantir's contract portfolio is a cornerstone of its strength, blending long-term government deals with a rapidly growing commercial business. A major U.S. Army agreement signed in mid-2025 consolidates numerous contracts into a multi-billion-dollar framework, praised by Army leadership as a step toward modernization. Additional defense and federal contracts, including classified programs, solidify Palantir's government presence. Meanwhile, U.S. commercial revenue is growing explosively, with a robust pipeline of high-value deals across finance, pharma, and energy sectors, where data security is critical. This balance of government and commercial contracts ensures a steady stream of recurring revenue.

Leadership is a key driver of Palantir's success. Alex Karp, with his bold vision of an AI-driven "efficient revolution," is targeting massive revenue growth with a smaller team. The second quarter was described as phenomenal, with the company exceeding expectations and raising guidance. Founders and executives hold significant stakes, aligning with shareholders, and Karp's control allows a focus on long-term innovation over short-term market pressures. With a strong cash position and minimal debt, Palantir can fund research and weather market fluctuations, maintaining lean operations with high margins.

Compared to peers, Palantir shines. Against data and AI firms like Snowflake, Palantir combines faster growth with profitability, while Snowflake remains unprofitable. C3.ai shows promise but lacks Palantir's scale and margins. Traditional defense contractors dominate hardware, but Palantir's software and AI focus carves out a unique niche. Big Tech offers cloud services, but Palantir's specialized AI workflows, often in partnership with firms like Microsoft, fill a distinct gap. Karp argues that advanced AI models need Palantir to function effectively in real-world applications.

Skeptics raise valid points. Palantir's valuation, with high price-to-earnings and price-to-sales ratios, suggests risk if execution falters. However, its rapid growth, consistent outperformance, and major contracts support a premium. Government revenue concentration is a concern, but bipartisan support for AI and defense, along with multi-year deals, reduces risk, while commercial growth diversifies the business. International revenue has been flat, but Palantir's focus on the U.S. market is driving results, with global defense wins adding upside. AI hype could fade, but Palantir's practical applications, from logistics to fraud detection, and strong industry partnerships ensure staying power. Insider selling and Karp's unconventional style raise eyebrows, but significant founder ownership and a long-term focus outweigh these concerns.

Palantir is a leader in AI-driven analytics for critical applications, with strong growth, high margins, and a fortified position in government and enterprise markets. Karp's vision of efficiency is delivering, with quarterly revenue surpassing key milestones. Despite its rally, the market may underestimate Palantir's long-term contracts and commercial expansion. In a world where data is king, Palantir is a leading force. This is a strong buy for 2025.

Sources: Palantir investor relations, earnings recaps (Nasdaq, Investopedia, AInvest), news (TheBearRevolt, SaaStr, Army.mil). Data as of Q2 2025.