There’s been a lot of debate surrounding artificial intelligence stocks this year.
A boom in AI spending, particularly by hyperscalers ramping infrastructure to meet surging research and development of chatbots and agentic AI, led to eye-popping returns for companies like Palantir Technologies, which markets data analytics platforms.
However, concern that spending could decelerate has picked up in 2025 because of worry over a tariffs-driven recession, causing many AI stocks like chip-maker Nvidia to stumble.
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While the eventual impact of tariffs on recession remains a question mark, there’s been little to suggest demand for Palantir’s services is slipping. Solid first-quarter earnings results and optimism that trade deals could make tariffs manageable have helped Palantir shares rally 63% this year after a 340% surge in 2024.
Palantir’s resiliency isn’t lost on long-time money manager Chris Versace. Versace, who first picked up shares last year, recently updated his price target as Palantir’s stock challenges all-time highs.
Palantir shares soar as AI demand surges
Investors’ interest in Palantir stock swelled after OpenAI’s ChatGPT became the fastest app to reach one million users when it was launched in December 2022.
ChatGPT’s success has spawned the development of rival large language models, including Google’s Gemini, and a wave of interest in agentic AI programs that can augment, and in some cases, replace traditional workers.
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The activity is widespread across most industries. Banks are using AI to hedge risks, evaluate loans, and price products. Drugmakers are researching AI’s ability to predict drug targets and improve clinical trial outcomes. Manufacturers are using it to boost production and quality. Retailers are using it to forecast demand, manage inventories, and curb theft. The U.S. military is even seeing if AI can be effective on the battlefield.
The seemingly boundless use cases—and the ability to profit from them—have many companies and governments turning to Palantir’s deep expertise in managing and protecting data to train and run new AI apps.
Palantir got its start helping the U.S. government build counterterrorism systems. Its Gotham platform still assists governments in those efforts today. It also markets its Foundry platform to manage, interpret, and report data to large companies across enterprise and cloud networks. And its AI platform (AIP) is sold as a tool for developing AI chatbots and apps.
Demand for that platform has been big. In the fourth quarter, Palantir closed a “record-setting number of deals,” according to CEO Alex Karp.
The momentum continued into the first quarter. Revenue rose 39% year-over year to $884 million. Meanwhile, Palantir’s profit has continued to improve as sales have grown. In Q1, its net income was $214 million, translating into adjusted earnings per share of 13 cents.
“Our revenue soared 55% year-over-year, while our U.S. commercial revenue expanded 71% year-over-year in the first quarter to surpass a one-billion-dollar annual run rate,” said Karp in Palantir’s first-quarter earnings release. “We are delivering the operating system for the modern enterprise in the era of AI.”
Fund manager resets his Palantir stock forecast
AI’s rapid rise has opened Palantir’s products to an increasingly new range of industries, allowing it to diversify its customer base.
For example, Bolt Financial, an online checkout platform, recently partnered with Palantir to use AI tools to analyze customer behavior better.
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The potential to ink more deals like this has caught portfolio manager Chris Versace’s attention.
“The result [of the Bolt deal] will be technology that can offer shoppers a customized checkout experience, embedded within retailers’ sites and apps, and it is one that will extend to agentic checkout as well,” wrote Versace on TheStreet Pro. “We see this as the latest expansion by Palantir into the commercial space, and we are likely to see more of this as AI flows through payment processing and digital shopping applications.”
Alongside Palantir’s deeply embedded government contracts, growing relationships with enterprises should provide Palantir with cross-selling opportunities, further driving sales and profit growth, allowing for increased financial guidance.
Palantir is guiding for full-year sales growth of 36%, and U.S. commercial revenue growth of 68%.
The chances for Palantir growth to continue accelerating has Versace increasingly optimistic about its shares.
As a result, he’s increased his price target to $140 per share from $130.
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