Palantir Technologies (PLTR) has kicked off 2025 with a bang, posting impressive first-quarter results that met or exceeded expectations and prompted the company to raise its full-year guidance. These strong financials suggest Palantir is well-positioned to navigate the macroeconomic uncertainty better than many might have anticipated.

In Q1, Palantir reported revenue of $883.86 million, marking a 39% increase year-over-year and a 7% rise from the previous quarter. Its strong growth points to solid momentum in its business, particularly in the company’s U.S. commercial segment, where revenue growth has accelerated. That’s especially significant in the context of looming concerns over potential defense budget cuts under President Donald Trump. If government contracts begin to slow, Palantir’s ability to ramp up its commercial operations could effectively provide a counterbalance.

These developments reflect the company’s strength in the increasingly competitive enterprise AI space, where it has carved out a niche with its advanced software platforms. Palantir’s growing traction across industries reflects that the demand for its Artificial Intelligence Platform (AIP) is expanding, positioning it well to deliver solid growth.

However, despite these promising signs, PLTR stock remains a risky bet. Let’s take a closer look.

Palantir’s Growth Accelerates

Palantir is one of the most compelling AI-driven software companies in the market, and its recent earnings report only strengthens that case. The company’s revenue growth has been accelerating, driven by solid AI-driven demand.

Over the past year, the company has steadily accelerated its revenue growth, jumping from 21% in the first quarter of 2024 to an impressive 39% in the first quarter of 2025. In Q1, Palantir’s U.S. revenue jumped 55% year-over-year, reflecting solid growth in commercial and government business. Its U.S. commercial business posted 71% growth compared to the same period last year. This continues a strong trend from the previous quarter when U.S. commercial revenue grew 64% year-over-year.

Palantir’s U.S. commercial operations surpassed a $1 billion annual run rate, driven by a surge in demand for its AIP from new and existing customers. The total contract value (TCV) booked in the U.S. commercial segment was $810 million, up 183% from a year ago. Over the trailing 12 months, Palantir has closed more than $2 billion in TCV for its U.S. commercial business. The remaining deal value in this segment soared 127% year-over-year. Further, PLTR’s U.S. commercial customer count reached 432, marking a 65% increase from a year ago, and it closed twice as many deals worth $1 million or more than it did during the same quarter last year.

Palantir’s U.S. government business also contributed meaningfully to growth. Revenue from this segment rose 45% year-over-year, totaling $373 million for the quarter. This performance reflects continued success with existing government programs and the growing adoption of AI-driven solutions.

The company delivered an adjusted operating margin of 44% for the quarter, up 800 basis points compared to last year. This reflects impressive operating leverage as the company scales.

Palantir’s Growth Momentum to Sustain

Palantir raised its full-year 2025 revenue guidance, signaling confidence in the ongoing momentum. The company now expects total revenue between $3.89 billion and $3.902 billion, up from its previous forecast of $3.741 to $3.757 billion. The midpoint of the new range implies a robust 36% growth rate. Palantir also upgraded its U.S. commercial revenue forecast to over $1.178 billion, representing at least 68% year-over-year growth, well above its earlier projection of 54%.

Here’s What Makes PLTR Stock a Risky Bet

With AI adoption accelerating across both commercial and government sectors and customer demand showing no signs of slowing, the company is well-positioned to sustain its growth trajectory.

However, Palantir stock has jumped by 430.5% over the past year, driving its valuation higher. For instance, its price-sales ratio currently stands at 101.7x, while the forward price-earnings (P/E) multiple is 361.9x, highlighting its premium valuation compared to industry peers. These metrics suggest investors have priced in a great deal of future growth, leaving little room for error. Any sign of a slowdown or hiccup in execution could significantly impact the stock's performance, making it a risky bet.

Wall Street recommends a “Hold” on PLTR stock. Moreover, analysts’ average price target of $84 indicates a significant pullback in Palantir stock.