Palantir (PLTR): The Emerging Digital Nervous System of U.S. Government

Since the end of 2024, Palantir’s forward price-to-earnings (P/E) ratio has jumped drastically, from 158 to the current 285. For comparison, both software application and infrastructure application sectors have P/E ratios well under 50, at 46 and 30, respectively. The question is, should investors consider PLTR stock overvalued, especially after the latest Q2 2025 earnings report was delivered on Monday?

Palantir: Organizations’ Central Nervous System

As one of our most covered stocks, we’ve explained why Palantir is in a unique position. Namely, Palantir (NASDAQ: PLTR) capitalizes on the centralizing tendency of governance systems, be they for corporate or federal governments. In the context of the U.S., Palantir provides critical AI tools for continued U.S. hegemony – data integration, harmonization, analytics – which lead to actionable insights.

Perhaps more importantly, given President Trump’s total alignment with Israeli interests, Palantir is there to scour data in order to identify friction points and prevent the erosion of that alignment. This is why, in late May, President Trump hand-picked Palantir to harmonize all data on U.S. citizens.

Most recently at the end of July, President Trump also announced the digital transformation of Americans’ medical records. Alongside Big Tech – Google, Amazon, Apple – OpenAI is at the forefront of that effort. In turn, OpenAI has a multifaceted relationship with Palantir, together with Anduril Industries.

Likewise, Larry Ellison’s Oracle is providing data cloud infrastructure for both Palantir and government agencies, alongside spearheading the Stargate Project and the Oracle Defense Ecosystem.

This all points to the creation of a highly integrated and centralized meta-system, as an evolution of governance technology. Palantir’s Foundry and Gotham facilitate this evolution by structuring data into a unified, consistent, and usable form. It is this more coherent system, aligned with particular interests, that then acts as a force multiplier, enabling cross-functional insights.

Yet, there is only so much data harmonizing to go around for a new breed of governance. After all, once Palantir’s systems are embedded, just as Windows OS has, where will the growth come from?

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Examining Palantir’s Q2 Earnings

For Q2 period ending June, Palantir recorded 48% revenue growth to just over $1 billion. Of that total revenue, Palantir’s commercial contracts brought in $306 million, 93% higher from the year-ago quarter.

Although this is impressive, it is also predictable given the rising tide of public-private partnerships. PPPs are the primary artifact of the centralizing tendency we addressed earlier, having greatly accelerated in the AI era. This was best demonstrated when President Trump visited Saudi Arabia and secured $600 billion in investment commitments.

Likewise, when President Trump headed the inaugural Pennsylvania Energy and Innovation Summit in Pittsburgh, in other words, for governance technology to work at maximum efficiency, there is no tolerance for fragmentation. And considering that Big Tech was constructed as such, in order to project U.S. hegemony, it would make sense that organizations under the Big Tech umbrella would partake in Palantir’s services.

Viewing it from another angle, three-quarters of Europe’s publicly listed companies rely on the U.S. tech stack, according to the latest Proton survey. Case in point, Ireland alone has 93% reliance on the US tech cluster.

This means that Palantir massively benefits from Europe’s vassal status. Not only are NATO nations incentivized to use Palantir, but EU companies’ growth depends on the highly centralized U.S. infrastructure – with Palantir as the central nervous system.

Accordingly, it is likely that Palantir’s commercial growth will continue to outpace government contracts. After all, this is what one would expect in a world where everything becomes one system with many public-facing facets.

And as Palantir serves as a cog of U.S. hegemony, pooling global capital, it is then no surprise that U.S. commercial revenue outperformed analyst expectations, jumping to $306 million vs $266 million expected.

Palantir’s Guidance and Price Target

For the full-year 2025, Palantir now expects up to $4.15 billion revenue, which is an increase from the previous guidance of $3.89 billion, representing 45% annual growth instead of 36%. This is likely to continue.

Not only did Europe have zero response to the bombing of the Nord Stream pipelines, but its vassal status was once again entrenched with an exceedingly bad (for the EU) trade deal. Consequently, the EU will be more reliant on the U.S. tech cluster, directly and indirectly benefiting Palantir.

Over the week, PLTR stock is up 10%, and 128% year-to-date. Presently priced at $172 per share, it is more than double the 52-week average of $85 per share. However, investors should still wait for the next stock market correction to take PLTR stock exposure.

That’s because the average PLTR price target is $127.50, and the ceiling estimate is quite close to the present price level, at $180 per share, according to WSJ’s forecasting data.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.