(PLTR)

126.33

(-2.46%)

At close: May 19 at 4:00:01 PM EDT

Those gains added roughly $24 billion back to the tech firm’s market cap, which pared gains Friday and stood at $277 billion at the market close. That figure was $293 billion at the end of the prior trading week.

Palantir’s data analytics and AI software is used by businesses, militaries, government agencies, and police departments alike — to the chagrin of human rights advocates and even some investors and former employees — to do everything from surveillance and war planning to supply chain management. As part of its commercial business, Palantir’s software is used by medical providers like Mount Sinai and the Cleveland Clinic, financial powerhouses such as Citi (C), oil companies such as BP (BP), and automakers such as Stellantis (STLA).

Sell-side analysts at RBC Capital Markets and Jefferies have pointed to Palantir’s high valuation — 80 times its expected revenue in 2025 — as a risk for investors, and they see shares falling to $40 and $60, respectively. Jefferies' Brent Thill called Palantir’s current value “irrational.”

Palantir shares have risen nearly 455% over the past year, benefiting more than other stocks in the AI trade from the boom in artificial intelligence.

But DA Davidson analyst Gil Luria, who holds a Neutral rating on the stock, told Yahoo Finance in an email Friday that “as long as it continues to perform on a fundamental basis, there is little reason to think that will stop.”

“No other technology company is growing this fast, at this scale, with these margins,” Luria said.

“Having said that, valuations this high rarely stay this high for very long,” he added. “There are a few things that could happen that would compress this valuation — competitors figuring out the formula, a weak quarter, or a disruption to US federal spending.”

“The high valuation also inherently makes shares more volatile — small changes to the outlook or sentiment can translate to large swings in the stock price.”

Logo of Palantir Technologies Inc. (Photo illustration by Cheng Xin/Getty Images) · Cheng Xin via Getty Images

William Blair analyst Louie DiPalma echoed that sentiment in a note to investors earlier this week: “Shares may continue to trade higher on new government contract wins and robust U.S. commercial adoption.” Palantir was recently awarded a controversial $30 million contract with ICE to surveil immigrants in the US. Palantir was also awarded a $178 million contract by the US Army in March to develop AI military trucks.

However, DiPalma said that “Palantir’s revenue growth will likely decelerate in the second half of 2025 and early 2026 due to competitive forces.”

Palantir said in its earnings report Monday that first quarter revenue in its international commercial segment, which sells software to businesses abroad, posted a 5% decline in the first quarter from the prior year due to "headwinds" in Europe.

Since 2023, Palantir executives have noted difficulties in that market, as the region has been slower to make large-scale investments in AI, faces slowing GDP growth, and Europe looks to achieve “tech sovereignty” by shifting investments from American tech to homegrown firms. And Palantir’s recent “alignment with the Trump administration” — seen in its recent defense contracts to expand AI capabilities for the military and its ICE contract to surveil migrants — “may be an issue for some European buyers,” Luria told Yahoo Finance in an email earlier this week.

“If the US is able to achieve similar deals with other European countries there may be an opportunity for Palantir to improve its continental Europe business," Luria told Yahoo Finance.