Buy PLTR Amid Its Recent Softness for Sparkling Returns Over Long Term

Artificial intelligence (AI)-powered data mining and analytics company Palantir Technologies Inc. PLTR has reported blockbuster second-quarter earnings results. The top line surpassed $1 billion for the first time in its history, exceeding all estimates. The bottom line also exceeded the consensus mark. Consequently, the stock price has skyrocketed 107.5% year to date. 

However, recently, the stock price has shown some softness. The stock has witnessed six straight days of negative closing, its largest losing streak since April 2024. PLTR is currently trading at a discount of 17.9% from its all-time high recorded on Aug 12. 

This weakness in the stock price opened up a lucrative opportunity for investors to enter this AI analytics software giant, as it has long-term growth potential. At present, the Zacks Consensus Estimate for PLTR’s earnings per share (EPS) for long-term (3-5 years) has surged to 40.8% compared with just 12.8% growth for the broad-market index — the S&P 500. 

PLTR’s stock price may fall to some extent more based on its overstretched valuation and the market’s inherent volatility. Each and every dip will be a sound entry point in the stock. Palantir currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Attractive Diversified Business Model

In the last reported quarter, Government revenues jumped 49.2% year over year to $552.98 million. Commercial revenues climbed 46.6% annually to reach $450.71 million. As of June 30, the total customer count was 849. 

Palantir Technologies’ commercial business has gathered pace besides its traditional government contracts. This is primarily due to PLTR’s aggressive venture in the AI space. In 2023, PLTR launched its Artificial Intelligence Platform (“AIP”), an AI-powered system that helps customers quickly concentrate and analyze data and discover how it can help advance their business goals. 

AIP provides unified access to open-source, self-hosted, and commercial large language models (LLMs) that can transform structured and unstructured data into LLM-understandable objects and turn organizations' actions and processes into tools for humans and LLM-driven agents. This shift in revenue structure has enabled the company to no longer depend on government defense agencies. 

Solid Guidance 

Palantir increased its full-year guidance, now expecting revenues between $4.142 billion and $4.150 billion, up from the previous forecast of $3.89 billion to $3.90 billion.  

For the third quarter, PLTR projects revenues between $1.083 billion and $1.087 billion, surpassing Wall Street's estimate of $983 million. The company also upgraded its projections for operating income and cash flow for the entire year. 

Additionally, PLTR’s remaining performance obligation, or the revenues guaranteed by contracts but not yet recognized, jumped 77% to $2.42 billion in the second quarter. This indicates potential for future growth, and the outlook remains optimistic.

Future Catalysts

CEO, Alex Karp, expressed enthusiasm about the company's prospects, stating in the quarterly letter to shareholders that “this is still only the beginning of something much larger and, we believe, even more significant.”

Palantir plans to invest more in hiring talent and advancing product features using its AI-powered technologies. This will enable the company to win and properly execute both government and commercial contracts. 

The U.S. Defense industry remains a major growth area for PLTR. The recently passed “One Big Beautiful Bill” allocates nearly $320 billion in supplemental funding to the Department of Homeland Security and the Department of Defense.

President Donald Trump’s $175 billion Golden Dome missile defense plan could create new contract opportunities by opening bids under the Scalable Homeland Innovative Enterprise Layered Defense (SHIELD) initiative.

Aside from Palantir technologies, BigBear.ai Holdings Inc. BBAI and C3.ai Inc. AI are the other major contenders in the AI-powered defense analytics software segment. 

Excellent Estimate Revisions

For 2025, the Zacks Consensus Estimate currently shows revenues of $4.17 billion, suggesting an improvement of 45.6% year over year and earnings per share of $0.65, indicating an increase of 58.5% year over year. The Zacks Consensus Estimate for current-year earnings has improved 12.1% over the last 30 days.

For 2026, the Zacks Consensus Estimate currently shows revenues of $5.56 billion, suggesting an improvement of 33.2% year over year and earnings per share of $0.84, indicating an increase of 30.5% year over year. The Zacks Consensus Estimate for current-year earnings has improved 16.7% over the last 30 days.

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This article originally published on Zacks Investment Research (zacks.com).

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