Can Palantir's Commercial Surge Sustain PLTR's Next Leg of Growth?

One of the most influential drivers of Palantir’s PLTR near-term outlook is the rapid acceleration of its commercial business, which has now emerged as the core pillar of its growth story.

While government relationships remain stable and supportive, the company’s decision to raise U.S. commercial revenue guidance points to a deeper, more durable shift in demand. Guidance was lifted to more than $1.433 billion from the prior outlook of over $1.302 billion, implying at least 104% year-over-year growth. This reflects a clear pattern of enterprises moving beyond pilot programs and committing to full-scale deployments, underscoring growing confidence in Palantir’s AI-powered decision platforms.

The strength of this commercial inflection is evident in Palantir’s upgraded revenue outlook for both the fourth quarter and full-year 2025. The company expects fourth-quarter revenues of $1.329 billion at the midpoint, indicating 13% sequential growth and 61% growth year over year. Full-year revenue guidance was raised to a midpoint of $4.398 billion, implying a 53% increase from 2024 and surpassing the previous forecast by $252 million.

Improved expectations for adjusted operating income and free cash flow further reinforce the central theme of disciplined execution. Palantir increased its adjusted income from operations forecast to a range of $2.151-$2.155 billion, up from earlier guidance of $1.912-$1.920 billion. Adjusted free cash flow is now projected between $1.9 billion and $2.1 billion compared with the prior range of $1.8 billion to $2.0 billion.

In contrast to many AI-focused peers that rely on heavy spending or struggle with inconsistent profitability, Palantir expects to generate GAAP operating income and net income in every quarter of 2025. This level of consistency adds credibility to its long-term operating model and strengthens investor confidence.

What truly differentiates Palantir is its ability to expand and diversify its revenue base without sacrificing the stability provided by government clients. The rapidly growing commercial pipeline gives PLTR a wider and more scalable growth runway, positioning the company as a reliable long-term compounder in enterprise AI. As organizations increasingly adopt AI-driven decision systems, Palantir’s strengths in data integration, security and real-world deployment experience become increasingly difficult for competitors to replicate.

Peer View: Snowflake and Datadog

Snowflake SNOW remains a relevant peer comparison, as both companies compete for high-value enterprise data workloads. Snowflake is aggressively embedding AI into its core cloud data platform and continues to position itself as a neutral data layer for enterprises. As its ambitions in advanced analytics expand, Snowflake’s commercial focus increasingly overlaps with Palantir’s, while pressure mounts for Snowflake to demonstrate improving profitability at scale.

Datadog DDOG provides another useful benchmark. Specializing in observability and cloud intelligence, Datadog has been expanding its AI-driven monitoring capabilities to deepen enterprise adoption. As companies modernize their infrastructure, Datadog strengthens its role across cloud operations, indirectly competing with Palantir as customers seek unified intelligence platforms that combine monitoring, analytics and automation.

PLTR’s Price Performance, Estimates

The stock has surged a whopping 158% over the past year, significantly outperforming the industry’s 2% rally.

From a valuation standpoint, PLTR trades at a forward price-to-sales ratio of 67X, well above the industry’s 4.6X. It carries a Value Score of F.

The Zacks Consensus Estimate for PLTR’s 2025 earnings has remained unchanged over the past 60 days.

PLTR stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research