3 Things to Know About Palantir (PLTR) Before It Reports Q2 Earnings

Perhaps the most interesting stock to buy in the market today is Palantir Technologies (PLTR -2.46%). The company, which is using its artificial intelligence (AI) platforms to completely alter how governments and commercial businesses operate, is up roughly 480% in the last year alone. So far in 2025, the stock is up almost 110%.

Along with that remarkable run-up is a story of obscenely high valuation. Investors are betting big on Palantir to the tune of some rarely seen valuations, such as a price-to-earnings ratio (P/E) nearing 700 and a forward P/E of 270.

Palantir has its second-quarter earnings call scheduled on Aug. 4, after the market’s closing bell. If it can maintain its growth momentum, its stock will continue to soar. However, a slowdown in growth could be devastating and let the air out of the Palantir balloon.

Here’s what investors should be watching for as the company prepares its Q2 report.

Image source: Palantir Technologies.

Palantir’s growth numbers

Palantir is seeing serious growth since it unveiled its Artificial Intelligence Platform (AIP) in the spring of 2023. AIP uses generative AI to allow users to input commands and lengthy prompts into Palantir’s powerful network in order to get real-time insights and predict the outcomes of events.

For government users of Palantir’s Gotham platform, it’s now much easier to command Palantir to tap into satellite networks to determine where opposing military assets are located, predict the results of operations, make recommendations, and offer insights as real-time battlefield situations evolve. Outside of the military aspect, Palantir’s platform will be helping to optimize and orchestrate workflows so users can make better decisions throughout the government.

Commercial users of Palantir’s Foundry platform can use AIP to help them manage supply chains, optimize operations, crunch healthcare data, and reduce manufacturing costs.

The company is seeing rapid growth in both platforms. While Palantir has long been recognized as a key government contractor, its commercial contracts in the first quarter were up 33% from a year ago, reaching $397 million. Much of that growth came from U.S.-based clients, where revenue jumped 71% from a year ago to reach $255 million. Government revenue was up a whopping 45% on a year-over-year basis to $487 million, with the lion’s share ($373 million) coming from U.S. government contracts.

That’s leaving Palantir flush with cash. The company ended the first quarter with $370 million in adjusted free cash flow, up from $149 million a year ago, and $5.4 billion in cash and cash equivalents with zero debt.

Key metrics to consider on Aug. 4

While Palantir’s growth numbers are impressive, it’s hard to say that the company is fairly valued today. Any company with a P/E ratio over 600 has far overextended its fair value…