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Palantir (NASDAQ:PLTR) is gearing up to crush Q1 estimatesanalysts peg EPS at $0.13 (up 62.5% Y/Y) and revenue at $862.1 million (up 35.9% Y/Y)but everyone's buzzing about what management will say on the outlook if federal budgets get slashed.
Shares popped 5.4% on May 2 as investors reminded themselves that Palantir has beaten EPS and revenue estimates 88% of the time over the past two years. Last quarter saw double-digit growth across government, commercial and AI segments, and a fresh NATO dealrolling out its Maven Smart System in Allied Command Operationsunderscores just how entrenched Palantir is in defense.
If you're asking What should I watch?, zero in on May 5's earnings numbers and, more importantly, management's guidance on federal spending. A beat could send PLTR higherespecially if they reassure investors about deal flow. But a cautious tone on government budgets could trigger a pullback, given Palantir's heavyweight dependence on defense contracts.
Markets will pivot fast on any hint of spending cuts, so tune in on Monday for PLTR's Q1 release and the all-important outlook commentary.
The chart traces PLTR's meteoric rise from below $30 in mid-2024 to just over $120 in early May 2025, reflecting robust investor enthusiasm. Analysts' 12-month high target of $125 sits barely above current levels, suggesting limited upside from here. By contrast, the average price target of $90 implies a 26% pullback, pointing to diverging views on sustainability. The low estimate of $40 signals a bear-case risk of nearly 67%, underscoring volatility concerns. This wide 3-way spread highlights split analyst sentiment as Palantir navigates macro headwinds and defense deal flow. Investors should balance the tight gap to the high against the steep drop to the average and low when sizing positions.
This article first appeared on GuruFocus.