Palantir Technologies (PLTR) stock is having a stellar run, continuing to build on its explosive gains from last year. After skyrocketing more than 340% in 2024, PLTR stock has already surged another 64% in 2025. The ongoing momentum in Palantir stock is supported by the significant and growing demand for its artificial intelligence solutions, both in commercial and government sectors.

While Palantir’s financials will continue to benefit from the higher adoption of its offerings and its growing customer base, the significant surge in its share price raises valuation concerns. Moreover, Palantir stock is already trading much higher than the analysts’ average price target of $93.89.

With its share price trading at a premium and expectations running high, can Palantir stock keep climbing in 2025? Let’s take a closer look.

Palantir Stock Mirrors Its Financial Performance

Notably, Palantir stock has so far mirrored its solid financial performance. The company’s accelerating revenue growth and improving profit margins are helping to fuel the rally. A significant factor behind this momentum is Palantir’s Artificial Intelligence Platform (AIP), which has become the main engine of growth by attracting new customers and expanding its business with existing ones in the U.S.

Thanks to solid demand, the software company posted $884 million in revenue for the first quarter, representing a 39% year-over-year increase and a 7% increase from the previous quarter. Notably, Palantir’s top-line growth rate has steadily improved over the past five quarters.

U.S. revenue was strong, climbing 55% year-over-year to reach $628 million. Moreover, Palantir’s profitability is also improving, with expanding margins and a robust customer base that’s growing in both size and spending.

Commercial business in the U.S. has emerged as a significant growth engine. First-quarter U.S. commercial revenue soared 71% year-over-year to $255 million, while total commercial bookings hit $930 million, a jump of 84% from the year before. Palantir achieved $1 billion in annual revenue run rate in its U.S. commercial segment, reflecting its growing foothold in enterprise AI.

Palantir’s customer base continues to scale, increasing 39% year-over-year to 769, with large clients contributing meaningfully to the bottom line. On average, the company generated $70 million (per customer) in trailing 12-month revenue from its top 20 customers, up 26%. This highlights its ability to expand business within its existing customer base by driving their use of Palantir’s software.

Government contracts contribute significantly to its financials. In Q1, government revenue rose 45% year-over-year to $487 million, thanks to both renewed contracts and new awards, especially in the U.S., where AI is being increasingly integrated into defense and public sector operations.

While Palantir has delivered solid growth, the momentum in its business will likely sustain and is reflected in its upgraded outlook for 2025. Management expects total revenue between $3.89 billion and $3.902 billion for 2025, up from earlier guidance of $3.741 to $3.757 billion. Moreover, U.S. commercial revenue is forecasted to exceed $1.178 billion, representing about 68% growth rate.

Is There Still Room to Run for Palantir Stock?

Despite the solid momentum in its business and strong outlook, Wall Street analysts currently have a “Hold” rating on the stock. Analysts’ consensus rating indicates that the positives are already priced in the stock, especially as PLTR stock has a forward price-earnings ratio of 333.27x and a price-sales ratio multiple of 101.5x.

That said, the Street-high target of $150 suggests another 22% upside from current levels, indicating room for further gains. Palantir is well-positioned to benefit from the AI boom. If the company can continue delivering strong financial results and capitalize on the growing demand for its technology, the stock may continue to rise, even from these elevated levels.