Palantir (PLTR) Stock Rallies After Analyst Cites Unique ‘Growth and Margin' Model
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The analyst foresees significant growth potential for the big data analytics company in its two prime markets: government contracts and U.S. commercial sectors. Palantir's shares have skyrocketed over 104% so far in 2025, backed by rapidly growing demand for artificial intelligence (AI). While other analysts remain skeptical of PLTR's sky-high valuation, Bracelin appears even more optimistic about Palantir's future prospects.
Palantir Has a Unique Growth and Margin Model
The analyst noted that Palantir has a 'one-of-a-kind' growth and margin model, with potential to reach $24 billion in annual run-rate by 2032. Bracelin added that both of Palantir's end markets, government and U.S. commercial customers, have a total addressable market (TAM) of around one trillion dollars each. He also recommends that investors watch the stock and buy shares on dips, since he views the company as one of the biggest winners of the AI revolution.
According to Bracelin, the company currently has a roughly $4 billion revenue run-rate and a free cash flow margin exceeding 40%. He forecasts that revenue from Palantir's U.S. government business could exceed $10 billion by 2030, with its U.S. commercial business reaching $5 billion in revenue by the decade's end.
Palantir's U.S. Business Is Expected to Explode
As shown by Palantir's KPI data from Main Street Data, the company's government and commercial segments are experiencing robust growth, with the government segment on a significant upward trajectory. During Q1FY25, Palantir's U.S. government revenue grew 45% year-over-year, while U.S. commercial revenue grew 71% compared to the prior year period.
The company's strategic focus on AI-driven solutions is driving substantial gains, particularly in the U.S. market, and this momentum is expected to continue into the future.
Is PLTR Stock a Buy, Hold, or Sell?
Currently, analysts remain cautious about Palantir's long-term outlook. On TipRanks, PLTR stock has a Hold consensus rating based on four Buys, 10 Holds, and three Sell ratings. Also, the average Palantir price target of $109.50 implies 29.3% downside potential from current levels.
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1 ‘Strong Buy' Defense Stock to Snag Instead of Palantir
While Palantir (PLTR) continues to trade at premium valuations, savvy investors should consider AeroVironment (AVAV), a defense technology powerhouse trading at significantly lower earnings multiples despite comparable growth prospects. AeroVironment develops defense technology and cyber operations at a much more attractive valuation than Palantir, making AVAV stock more attractive for value-conscious investors. Citizens Bank recently initiated coverage on AVAV stock with an 'Outperform' rating and a price target of $325, recognizing the company's leadership position across multiple defense domains. More News from Barchart Should You Buy the 40% Post-Earnings Plunge in The Trade Desk Stock? Elon Musk Predicts Tesla Will 'Have Autonomous Ride-Hailing in Probably Half the Population of the US by the End of the Year' Stocks Settle Higher on Solid Earnings and Hopes for a Ukraine Peace Deal Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. The $4.1 billion BlueHalo acquisition has transformed AeroVironment into a diversified defense technology leader spanning air, land, sea, space, and cyber domains. This strategic acquisition reduces concentration risk as no single mission area is expected to contribute more than 30% of fiscal 2026 revenue. With over 50 years of proven battlefield experience and nearly $2 billion invested in research and development over the past decade, AeroVironment delivers software-defined hardware solutions, including Switchblade loitering munitions, unmanned aircraft systems, and cybersecurity platforms. The expansion of the U.S defense budget, which includes $25 billion for missile-defense systems and $13.4 billion for autonomous platforms, directly benefits AeroVironment's core competencies. AVAV stock is well-positioned to capitalize on the U.S. government's shift toward next-generation defense technologies. How Did AeroVironment Stock Perform in Fiscal 2025? In Q4 of its fiscal 2025 (ended in April), AeroVironment reported revenue of $275 million, an increase of 40% year over year. The company ended fiscal 2025 with revenue of $821 million, indicating organic growth of 14% despite lower Ukraine-related sales. AeroVironment secured $1.2 billion in total bookings and reported a backlog of $726 million, up 82% year over year. Notably, its Loitering Munition Systems segment generated $352 million in annual revenue, an 83% increase, driven by strong Switchblade demand from both domestic and international customers. AeroVironment's innovation engine produced three groundbreaking products during fiscal 2025, which include the AI-driven P550 autonomous UAS, the JUMP-20X vertical takeoff maritime system, and the Red Dragon one-way attack drone. These solutions directly address critical military priorities and position AVAV stock for future revenue generation, with management expecting these platforms to generate hundreds of millions in backlog over the next two to three years. International expansion continues to accelerate, with 52% of total sales now coming from global customers across 100 allied nations. Eight countries have placed Switchblade orders totaling $250 million in fiscal 2025, while another eight allies are actively engaged in the foreign military sales process. AeroVironment's ambitious fiscal 2026 guidance of $1.9 billion to $2 billion in revenue reflects the transformative impact of the BlueHalo integration and strong underlying demand. The company restructured into two segments: Autonomous Systems (expected $1.2 billion to $1.4 billion revenue) and Space, Cyber & Directed Energy ($700 million to $900 million revenue), with both targeting double-digit growth. Management's 70% visibility into the midpoint guidance, higher than historical ranges, underscores confidence in the company's growth trajectory and positioning within favorable defense spending cycles. Is AVAV Stock Still Undervalued? AVAV stock has returned close to 1,000% to shareholders over the past decade, valuing the company at a market cap of $12.8 billion. Wall Street estimates revenue to grow from $820.6 million in fiscal 2025 to $3.5 billion in fiscal 2030. Comparatively, adjusted earnings are forecast to expand from $3.28 per share to $9.60 per share in this period. Today, AVAV stock trades at a forward price-earnings multiple of 75x, above its five-year historical average of 54x. If the tech stock is priced at 40x forward earnings, it should trade around $384 in August 2029, indicating upside potential of 45% from current levels. 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But the stock may now be too hot to touch. Going further, it may even be time for shareholders to take some profits. Record-breaking quarter The artificial intelligence (AI)-focused data analytics specialist's second-quarter revenue jumped 48% year over year to just over $1 billion, marking Palantir's first-ever billion-dollar quarter. Adjusted earnings per share rose 78% to $0.16, beating analysts' consensus forecast for $0.14. U.S. government contracts grew 53% to $426 million, while U.S. commercial revenue soared 93%, reflecting explosive demand for its AI platforms. Palantir's remaining performance obligations, a measure of booked but not yet recognized revenue, also climbed sharply. The metric, which helps highlight continued demand for the platform, was up 77% year over year to $2.4 billion. Notably, this was a 27% sequential increase -- faster than the company's 14% quarter-to-quarter increase in revenue. 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Time to Sell? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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Prediction: 2 Stocks That'll Be Worth More Than Palantir 3 Years From Now
Key Points Palantir's valuation has risen much higher than Nvidia's. ASML and AMD just have to continue being themselves to be larger than Palantir if a correction comes. 10 stocks we like better than Palantir Technologies › Palantir (NASDAQ: PLTR) is one of the hottest stocks in the market. It has delivered explosive returns for shareholders this year and is rapidly growing from a business standpoint, too. There's nothing to dislike about Palantir's business from an investing standpoint (you may have qualms about what its software is used for in government, but that's beside the point), but there is a lot to dislike about the stock. Alongside Palantir's rapid rise has been a massive expansion in valuation, and it has become the most expensive stock on the market. I think that this is unsustainable and could lead to some lackluster stock performance over the next few years. Although Palantir has a market cap of over $425 billion, I think ASML (NASDAQ: ASML) and AMD (NASDAQ: AMD) could surpass it over the next three years, despite each being worth around $275 billion. The case against Palantir As mentioned above, Palantir's business is phenomenal. Its software is becoming the building blocks for deploying AI in business and government, and it has the growth to show for it. In the second quarter, Palantir's revenue rose 48% year over year to more than $1 billion. That blew away expectations and showcases the unstoppable demand Palantir is experiencing. The problem is that the growth rate is already baked into the stock. One of the premier AI stocks over the past few years has been Nvidia. Nvidia posted growth rates of more than 200% during its run, yet never traded for more than 46 times sales or 51 times forward earnings. Palantir has far exceeded those levels despite much slower growth. 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ASML and AMD don't have to do anything special to be worth more than Palantir Both ASML and AMD are reasonably priced for their current business, and each is expected to put up respectable growth figures over the next few years, although still far slower than Palantir. Using Nvidia's max valuation of about 50 times forward earnings as the high point for Palantir's earnings in three years ($3.5 billion), that would indicate the stock should be worth around $175 billion. As mentioned before, Palantir trades at around a $425 billion market cap right now, so this would indicate a substantial drop. Both ASML and AMD are valued at around $275 billion, so Palantir's potential drop would cause these two to be worth more. Palantir is an incredibly overvalued stock, but it has a strong and devoted following, and it may continue to defy traditional valuation metrics, similar to Tesla. Investors are more than capable of holding onto Palantir stock at elevated prices, so the correction to its price may never come, despite all factors indicating that it should. I still think AMD and ASML will (and should) be valued higher than Palantir's stock, but investors will have to wait and find out if that turns out to be true. Should you buy stock in Palantir Technologies right now? Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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Prediction: 2 Stocks That'll Be Worth More Than Palantir 3 Years From Now was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
