Palantir stock jumped 5% on Monday following a bullish note from Oppenheimer’s Param Singh ahead of the company’s Q2 earnings report scheduled for August 3. Despite a tough year with the shares down 29%, Singh predicts Palantir will outpace its own revenue guidance, signaling strong momentum going into the results.
Revenue Growth Set to Outperform Expectations
Singh forecasts Palantir will deliver an 84 to 85% year-over-year increase in revenue for the quarter, surpassing the management’s midpoint guidance of 79%. This signals a solid earnings beat that could reshape investor sentiment, especially as the stock is down nearly a third since the start of the year amid valuation concerns and growing competition from generative AI players.
Oppenheimer also expects Palantir to lift its full-year revenue growth forecast beyond the current 71%, pushing towards more than 75% growth. Wall Street sees adjusted earnings per share of $0.35 on revenue of $1.81 billion for Q2. To put this in perspective, Palantir reported an EPS of $0.16 and $1 billion in revenue in the same quarter last year, highlighting significant expansion.
US Government Drives Most of the Gains
The US Government segment remains the engine behind Palantir’s surge. Singh projects low 80% year-over-year revenue growth for this unit, fueled by increased spending from the Department of Homeland Security after the government shutdown ended on April 30. also the ongoing conflict in the Middle East has ramped up demand as Palantir secures more task orders and gains ground as a preferred contractor within the Department of War.
However, Palantir’s international government growth is expected to falter. European allies such as France and Germany are pulling back, and increased regulatory scrutiny in the UK poses challenges for overseas expansion.
Commercial Segment Shows Impressive Expansion Amid AI Competition
Strong momentum continues in the US Commercial business, with Singh forecasting at least 135% year-over-year growth and a full-year rise of at least 125%. While concerns have grown about large language model (LLM) providers chipping away at Palantir’s market through forward-deployed engineers, Singh argues these threats are overstated.
Palantir’s Ontology platform tackles complex workflows that LLMs currently can’t address, which focus mostly on simpler applications. The company’s launch of new agentic AI tools, including Orchestrator, Agent Engine, and Agent SDK at the recent DevCon 6 event, aims to capture demand for autonomous AI workflows and reduce clients' reliance on external platforms, speeding up value delivery.
Oppenheimer’s $200 price target implies a 58% upside from current levels, well above the Street’s average target of $181.24, which suggests a 43% potential rise in the next year.
This article is for informational purposes and does not constitute financial advice.
