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Palantir Technologies Inc. (NASDAQ: PLTR) continues to deliver market-beating performance. PLTR stock is up more than 83% year-to-date, and there are several reasons for investor enthusiasm. |
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Valuation remains a major concern for investors. Currently, Palantir has a price-to-earnings (P/E) ratio just below 600x, with a forward P/E around 488x. The market assigns a premium to technology stocks. However, by most standard measures, PLTR stock is priced for expectations of long-term hypergrowth. |
Yet for all the concerns about Palantir’s valuation, the company is approaching the significant milestone of generating $1 billion in revenue in a quarter. If current growth trends hold, the company could hit that milestone in the third quarter of 2025.. |
By itself, that achievement wouldn’t justify the company’s premium valuation. But it would add fuel to the bullish argument that Palantir has the means to grow into its valuation. |
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Here’s Why $1 Billion in Revenue Is Achievable |
In the first quarter of 2025, Palantir reported global revenue of $883.86 million. That's up from the $827.52 it reported in the fourth quarter of 2024. In percentage terms, that’s an increase of 6.8%. The percentage gain was lower than the 14% gain made between the third and fourth quarters of 2024. However, it was in line with previous quarters, so let’s use that as a guide. |
If the company notches a 6.8% gain in revenue when it reports earnings in August, it will post approximately $943.78 million. That puts it on pace to hit the $1 billion mark in revenue in the third quarter. |
To be fair, that’s above the company’s own forecast of between $934 million and $938 million. Even if we use the low end of that guidance, at a growth rate of around 7%, the company could still reach $1 billion in revenue by the end of the year. |
Higher Revenue Puts a Spotlight on the Company’s Operating Leverage |
Palantir’s business model is highly scalable. The company’s gross margins consistently approach 80%. That means incremental revenue generates disproportionately higher profits. |
At this scale, operating leverage becomes a significant force. Palantir’s adjusted operating margin in the first quarter was 44% and its net income margin was 26%. It’s reasonable to assume that both percentages would increase. But even if they don’t, $1 billion in revenue would mean approximately $260 million in GAAP net income per quarter. |
That's nearly 30% higher than the $203 million it generated in the first quarter. |
Based on those numbers, it’s reasonable to project growth in GAAP EPS from around 8 cents in the last quarter to somewhere around 12 cents, which would put annual GAAP EPS at around 47 cents per share. Palantir would also see its free cash flow grow to around $380 million per quarter. |
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Would $1 Billion in Revenue Move PLTR Stock? |
While achieving $1 billion in quarterly revenue would undoubtedly be a significant achievement, it won’t do much to address the stock’s valuation concerns. At its current price above $138, Palantir’s market capitalization exceeds $300 billion. On a GAAP basis, the company trades at over 400 times forward earnings, reflecting how much optimism is already priced in. |
Even on an adjusted basis, excluding stock-based compensation, Palantir’s forward P/E remains in the range of 150–200x earnings. That's a premium reserved for only the fastest-growing software and AI companies. Investors can make the case that Palantir is one of those companies. |
Investors will want to see if Palantir can continue executing on those expectations and demonstrate that $1 billion quarters are not a one-time spike. Doing so would further validate the company’s long-term strategy and may attract even more institutional ownership. |
Written by Chris Markoch |
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