Tom Nash
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Palantir’s Q4 2024 Earnings Preview [Deep Dive]
🕑 Added 2025-01-31 18:00:09 +0000 UTCTom here, and today we’re going deep into the heart of Palantir’s Q4 2024 results.
If you’ve been following the Palantir story from day one or if you just jumped in when the stock went nuclear this year, buckle up. We’re about to do a monster deep dive into every angle imaginable.
Now, if you’ve watched any of my videos before, you know I don’t do fluff. We’re talking facts, realistic analyses, and a dash of speculation for color, but always grounded in logic. No “we’re going to Mars tomorrow” talk without receipts.
Table of Contents
Setting the Stage: Why Q4 2024 Earnings Matter So Much
Recap: Palantir’s Meteoric Rise in 2024
DeepSeek’s ‘AI on a Budget’—Threat or Myth?
Palantir’s Real AI Advantage: AIP, Foundry, Gotham, and Beyond
Government Dominance: The Backbone Contracts
Commercial Expansion
AI Commoditization: How Cheaper Models Could Help Palantir
Financial Deep Dive: Revenue, EPS, FCF, SBC, and Share Count
Price Targets: $50, $100… or $500?
The Trump Angle and Federal Alignment
Risks and Bear Cases: Are We Missing Anything?
Long-Term Vision: Gen AI 2.0, AI Agents, and Ontologies
Could Share Buybacks Be on the Horizon?
My Personal Strategy Around Q4 2024
Conclusion
1. Setting the Stage: Why Q4 2024 Earnings Matter So Much
Earnings calls come and go every quarter, so what makes Q4 2024 for Palantir stand out? It’s the confluence of three major narratives:
Tech Boom: Tech stocks, particularly in AI, have seen monstrous runs. Palantir found itself at the center of the hype after going profitable and flexing its free cash flow muscle. The question is: can they maintain or even accelerate that momentum?
DeepSeek’s AI Disruption: This Chinese startup claims to have trained a ChatGPT-level model, or near that scale, for just $5.6 million. The claim alone rattled the market. If advanced AI is supposedly that cheap, does Palantir stand to benefit from a wave of cost efficient AI adoption?
Government & Commercial Inflection: Palantir’s government business is already robust, but the Q4 numbers might confirm the rumored 50% growth in commercial revenues. That’s critical for a stock that’s often pigeonholed as “government only.”
Why does all this matter for an earnings call? Because the forward guidanceת the outlook for 2025 and beyondת tends to get shaped heavily by Q4 performance and management commentary.
If Alex Karp and team come out swinging with bullish statements, it could set the tone for all of 2025. If they’re cautious, or the numbers underwhelm, we could see a near term pullback.
2. Recap: Palantir’s Meteoric Rise in 2024
Before we can appreciate why Q4 2024 is so pivotal, let’s rewind to the start of the year.
Palantir kicked off 2024 trading in the teensת a reflection of market pessimism. A few major catalysts turned that around:
First Profitable Quarters: Palantir posted GAAP profitability, a milestone many haters said they’d never reach.
Consistent Free Cash Flow: The numbers told us that, even though GAAP profit was borderline, free cash flow was strong, proving the underlying business had real muscle.
Bullish AI Sentiment: As ChatGPT mania took over, suddenly “AI + data integration” was the hottest corner of tech. Palantir just so happened to check all those boxes.
Massive Government Deals: Renewals and expansions with the U.S. Army, Department of Defense, and other agencies gave Palantir street cred as the indispensable partner for mission-critical software.
By mid year, the stock doubled.
Then came a wave of profit-taking, short-seller talk, and new controversies, but Palantir maintained a higher floor than it did at the start of the year. That sets the stage for Q4.
If the company can keep the momentum goingת particularly with new deals or strong commercial growthת 2025 might be another banner year.
3. DeepSeek’s ‘AI on a Budget’—Threat or Myth?
Let’s address the 600 pound AI gorilla in the room: DeepSeek. This Chinese based entity claims it developed an AI model to rival GPT with a mere $5.6 million investment.
Is That Even Possible?
Realistic Cost of GPT-4 Scale Models: Typically, you’d need tens or even hundreds of millions of dollars in GPU time, data acquisition, and engineering labor to get close to GPT-4-level performance.
So, a $5.6 million figure is, frankly, suspicious. It could be that they’re omitting government subsidies, hidden infrastructure, or partial truths about how “GPT-4-like” the model actually is.
What Palantir Gains: If AI truly becomes cheaper to train, the focus and value shift away from the LLM arms race and toward deployment, customization, security, and integration.
That’s precisely where Palantir has always excelled. They don’t want to build the biggest LLM in-house; they want to integrate the best LLM: OpenAI, Google, or even DeepSeek, into Foundry or Gotham so that clients get real-world insights.
Q4 Connection: On the upcoming earnings call, expect analysts to ask management about the AI “commoditization” trend, referencing DeepSeek or other cheaper AI solutions. If Palantir can articulate how they actually benefit from lower AI training costs, it might flip the narrative from fear to excitement.
4. Palantir’s Real AI Advantage: AIP, Foundry, Gotham, and Beyond
One big question swirling around Palantir is how it plans to harness the next wave of AI (often called Gen AI 2.0 or “Agentic AI”). Some folks hear “Palantir AI” and assume it’s just marketing fluff. But let’s be clear:
AIP (Artificial Intelligence Platform): This new offering is designed to integrate any LLM with an organization’s data—securely, efficiently, and at scale. So if DeepSeek’s rumored cheap model is real, or if OpenAI’s GPT-5 emerges, Palantir can plug it right in.
Foundry for Commercial: Palantir’s Foundry platform is a data integration, analytics, and decision-making powerhouse. By layering AI (via AIP) on top of Foundry, a business can automate tasks in real time. Think supply chain management, production scheduling, workforce allocation—stuff that matters to the bottom line.
Gotham for Government: The same logic applies to intelligence, defense, and law enforcement. Now you’re not just feeding data into a black box, you’re hooking it up to advanced AI, with an ontology that organizes sensitive information effectively.
Apollo: This is Palantir’s continuous delivery system that ensures software updates can be shipped seamlessly. If AI models are updated often (which they are), Apollo can push these new models or AI functionalities out to clients instantly.
All this leads to one big differentiator: Palantir isn’t just an “AI model shop.” They’re more like the infrastructure and glue that makes AI truly valuable in real-world operations. That’s why this Q4 call could clarify the revenue potential from these AI layers.
5. Government Dominance: The Backbone Contracts
Every quarter, Palantir’s government business draws a ton of attention, because let’s face it, that’s where Palantir built its name. And the deals keep coming:
Army Vantage Contract: Extended at $618.9 million in total ceiling value. This multi-year program is crucial for modernizing the U.S. Army’s data ops. The question is how much of that multi-hundred-million chunk lands in Q4 vs. how much is deferred to future quarters.
U.S. Special Operations Command Contract: $36.8 million may seem small in comparison, but it’s another feather in Palantir’s cap, reinforcing trust in mission-critical contexts.
Anduril Partnership: Where Palantir’s AIP meets Anduril’s Lattice ecosystem to handle advanced threat detection and national security. The synergy here could attract even more defense dollars, especially as the U.S. gears up for a new wave of AI-driven warfare technologies.
FedRAMP High Authorization: Palantir’s software has the highest security clearance possible for federal agencies. Expect Q4 2024 to reflect at least some incremental revenue from new or expanded contracts that rely on this accreditation.
Why does this matter? Government contracts tend to be large, stable, and multi-year. Wall Street wants to see them keep growing, and more importantly, wants to see whether new government bookings carry into 2025 guidance. That’s often the best leading indicator of Palantir’s “floor” in revenue, giving them a cushion for experimentation on the commercial side.
6. Commercial Expansion
The other half of the Palantir puzzle is the commercial segment, specifically in the United States. A while back, Alex Karp hinted that U.S. commercial growth might hit 50%. That’s massive for a segment that skeptics once said “didn’t really exist.” So what’s driving this?
Demand for Real-World AI: Enterprises are tired of the hype. They want results, whether that’s a predictive model that cuts supply chain costs or a system that optimizes workforce scheduling.
Palantir’s Foundry and AIP do exactly that.
Data Security: In a post-data-breach world, Palantir’s ability to keep information siloed yet integrated is a big selling point. If you’re a Fortune 500 company messing with advanced analytics, you don’t want your proprietary data leaking. Palantir’s track record with the U.S. government helps build confidence.
Client Renewals and Upsells: If we see in the Q4 call that existing commercial clients are doubling down, that’s a leading indicator of stickiness. Palantir’s software is known for being “very sticky”; once integrated, it’s painful (and expensive) to rip it out.
Watch Q4: Are we at 40%, 50%, or something beyond that for commercial growth? And how is that trending into 2025? This is where analysts will poke management: “What’s your forecast for next year? Another 50%?” We’ll see if they tip their hand.
7. AI Commoditization: How Cheaper Models Could Help Palantir
One of the strangest twists of 2024 was the fear that cheaper AI—like DeepSeek’s alleged model—would undercut Palantir. In reality, it’s more likely to do the opposite:
Margin Shifts: If training giant LLMs gets cheaper, the margin for creating such models compresses. That means the real money—and the real moat—shifts to how these models are deployed, integrated, and scaled.
Implementation Over Production: Palantir is all about integrating advanced AI into daily operations. They don’t care if it’s OpenAI’s GPT-5, Google’s Gemini, or DeepSeek’s R-1. As soon as a new model emerges, Palantir can slot it into a client’s Foundry environment.
Potential Easing of GPU Bottlenecks: A big stumbling block in 2023–2024 was the shortage and massive cost of top-tier GPUs like Nvidia A100s or H100s. If cost pressures ease, Palantir’s clients can spin up AI workloads faster and cheaper, likely accelerating adoption.
Look for Q4 guidance or commentary about AI pricing. If Palantir suggests that the cost side is stabilizing or dropping, that’s bullish. It implies they can handle bigger workloads for clients without hitting a GPU supply bottleneck or insane cloud bills.
8. Financial Deep Dive: Revenue, EPS, FCF, SBC, and Share Count
Now let’s get into the nitty-gritty. Palantir guided for $767M to $771M in Q4 2024, while some analysts have pinned them at $776M or so. The adjusted income from operations is projected at $298M to $302M, a wide range, but it shows they’re aiming for around a 38–40% adjusted operating margin.
EPS
Analyst Estimates: Some estimates for full-year 2024 EPS hover around $0.38, up from earlier forecasts of $0.36. If Palantir beats in Q4, that might push them closer to $0.40 for the year.
2025 and Beyond: There’s talk of $0.50 or even $1 EPS by 2026. If Q4 underscores Palantir’s ability to expand margins, the $1 EPS mark might arrive sooner.
Free Cash Flow (FCF)
Why It Matters: FCF shows the raw cash engine of the business. Palantir has historically posted strong FCF relative to its revenue size, a major selling point for bullish investors.
Q4 Watch: If they maintain or expand FCF margins, it might quell concerns about heavy spending on data centers or AI training.
Stock-Based Compensation (SBC)
The Elephant in the Room: Palantir’s large SBC has diluted shareholders. This used to be a top bear argument, “They’ll never rein in costs!”
Trending Down: Over the past few quarters, Palantir has taken steps to reduce SBC (or at least growth in SBC). If that trend continues in Q4, we might see a more favorable net income picture.
Share Count
Will They Buy Back Stock?: Palantir has the authorization to do share buybacks, but they haven’t done so aggressively. The big question is: Do they believe the stock is still undervalued enough to buy back shares at ~$70+ or $80? If management signals they might do so in 2025, that’s a huge statement of confidence.
9. Price Targets: $50, $100… or $500?
The range of price targets for Palantir is enormous. Let’s break down a few notable figures:
Short-Term Bear: Some analysts foresee a drop back to the $50 range if Q4 or Q1 2025 disappoint. This would reflect profit taking, combined with a broader AI tech sell-off.
Aggressive ($100): This scenario likely requires a blowout Q4, a big jump in guidance, or a major AI or government contract announcement.
Ultra-Bullish ($500): Some see Palantir eventually claiming a huge chunk of the AI market by 2030–2035, particularly if it becomes the default “AI operating system” for big enterprises and government. That’s a multi-year horizon, not something that hinges solely on Q4 2024.
But Q4’s commentary on 2025 can either reinforce or undermine the path to that dream scenario.
10. The Trump Angle and Federal Alignment
It’s no secret that Palantir’s CEO, Alex Karp, has voiced strong opinions about the synergy between Silicon Valley innovators and the U.S. government. Now, with the potential for another Trump administration—or any administration that’s big on defense spending—Palantir might see an even greater tailwind.
Historical Precedent: Under previous administrations, Palantir benefited from a push to modernize defense data infrastructure. Another wave of pro-tech, pro-defense spending might supercharge future deals.
Deregulation: If a new or returning administration loosens procurement rules or expands budgets for AI defense projects, Palantir stands first in line to benefit.
Will they comment on politics in the Q4 call? Probably not directly, but they might discuss how government demand for advanced AI solutions is trending. If they hint at bigger budgets on the horizon, it might as well be a wink at the next White House occupant, whomever that might be.
11. Risks and Bear Cases: Are We Missing Anything?
Let’s not sugarcoat it: Palantir’s stock is volatile, and there are legitimate bear arguments.
Share Dilution and Valuation: While Palantir’s focusing more on profitability, there’s still a chunky share count from past SBC. If the stock trades at a triple-digit P/E multiple, any slip in growth or guidance can lead to a sharp drop.
Overreliance on Government: Some worry that too much of Palantir’s revenue is tied to Uncle Sam. If defense spending priorities shift away from Palantir’s niche, that’s trouble.
Competitive Threats: DeepSeek is one example, but other players—Snowflake, C3.ai, Databricks—are all vying for enterprise AI mindshare. It’s a crowded space, even if Palantir stands out in security and integration.
Macroeconomic Shocks: If the economy dips, big government or enterprise projects might get delayed or scaled back, hitting Palantir’s growth.
12. Long-Term Vision: Gen AI 2.0, AI Agents, and Ontologies
The hottest topic in AI right now is the shift from basic LLMs to more advanced “Agentic AI.” Nvidia calls this the move from Gen AI 1.0 to Gen AI 2.0, and eventually to AI that operates with minimal human supervision.
Test Time Computing: New AI models take extra time and resources to generate more accurate answers. This could cost as much as $1,000+ per query at scale, making it far pricier than chatbots like ChatGPT.
Replacing White-Collar Work: If these advanced AIs can truly replace entire job roles, companies will pay big. But they’ll only do it if they trust the platform to handle sensitive data. Again, Palantir’s strong track record with the government is an asset.
Palantir’s Ontologies: An ontology is basically a map of how data interrelates. If your organization wants to feed an AI with real-time, integrated data from multiple sources, you need something like Foundry’s ontology. This is why Palantir’s approach is sticky—once they build the digital “skeleton” of your business, swapping it out is painful.
Q4 Relevance
We might not see direct line items in Q4 specifically saying “Agentic AI revenue,” but we might hear management talk about pilot programs or commercial clients adopting advanced AI solutions. That’s how you read between the lines to gauge Palantir’s readiness for the next wave of AI.
13. Could Share Buybacks Be on the Horizon?
Investors often ask: “With all this free cash flow, when will Palantir buy back stock?” The board authorized up to $1 billion in share repurchases, but the company hasn’t gone all-in. Some factors:
Valuation Concern: Management might believe the stock is expensive relative to the near-term. They might prefer to wait for dips or allocate capital to growth.
Future M&A or Investments: Palantir might want to acquire smaller AI firms or build new data center infrastructure. They might be saving cash for strategic expansions.
Symbolic Move: If they do announce a significant buyback, it’s a huge statement that they believe the stock is undervalued (or at least fairly valued) long term.
If Q4 is strong and if management says something like, “We believe repurchasing shares is an effective use of capital in 2025,” that could spark a new wave of buying.
15. My Personal Strategy Around Q4 2024
You guys know I always stress having a plan before earnings. The market can do wild stuff after the call—jump 10%, drop 15%, or stay flat if the news is already priced in.
Long-Term Investor? If you believe Palantir’s narrative—that it’s the central AI deployment platform for governments and large enterprises—then short-term dips shouldn’t faze you. Q4 is just one piece of a bigger puzzle.
Trader’s Mindset? If you’re purely playing the momentum, keep an eye on the guidance. Palantir’s management is historically conservative. If they surprise with an aggressive outlook for 2025, you might see a quick price surge. Conversely, if they lowball or remain vague, momentum traders might lock in profits.
Price Targets and Valuation: If I see the Q4 call showing huge commercial traction (50%+ yoy growth), new government wins, and an acceleration in free cash flow, I’d be comfortable with the stock trending toward that $89 mark in early 2025. If they blow out numbers and guidance by a wide margin, we might see $110. But I’m also prepared for a short-term correction if the call is only so-so.
15. Conclusion: The Path Forward and Key Takeaways
Q4 2024 for Palantir is a major line in the sand. It’s the quarter that might bridge their remarkable 2024 run into an even bigger 2025, or it could reveal that growth is plateauing short-term. Here’s the final rundown:
DeepSeek Impact: More hype than harm, likely. Cheaper AI only accelerates Palantir’s integration and deployment advantage.
Government Contracts: The bedrock of Palantir’s revenue. All signs point to continued expansions, especially with the Army Vantage and Anduril synergy.
Commercial Breakthrough: 50% yoy growth in the U.S. commercial segment would confirm Palantir has successfully pivoted beyond “government only.”
Financials: Keep an eye on EPS, FCF, and, crucially, SBC. If these show robust improvement, it solidifies Palantir as a long-term generational play.
Risks: Share dilution, macro shocks, and stiff competition from other AI integrators and LLM providers remain real. If Palantir stumbles or if government budgets shift, expect volatility.
My final stance? I’m bullish on Palantir’s future, especially if you’re looking 5–10 years down the line. Q4 2024 is about validating they can keep the momentum going, growing both commercial and government lines, and addressing any lingering investor skepticism (particularly around AI commoditization). If management nails the messaging, and the numbers back it up, Palantir’s story as an AI juggernaut remains firmly on track.
Thank You for Reading
If you stuck around for all this, congratulations, you’re as hardcore about Palantir as I am! As always, this isn’t financial advice; I’m just a guy on the internet who’s been following Palantir since it was a whispered rumor in the defense community. Do your own due diligence. And if you found this helpful, you know what to do: show some love, and consider staying tuned for post-earnings analysis, where we’ll break down the actual numbers and dissect everything Alex Karp shares on the call.
Until then, keep your eyes on the prize, keep your mind on the fundamentals, and keep your emotions in check, because no matter how good a story is, the stock market can always surprise you. Tom, signing off.
Comments
Nic
Nice run down Tom! Love from Hong Kong - Nick
Tom
Tom, great rundown. Are you concerned at all about Palantir being unable to adequately respond to the demand for their services given they like to embed field employees with their customers? Thanks as always.
Island Boy
Great write up homie. You never cease to amaze me with your in-depth detailed articles. The good ol' M&A that everyone might overlook. Palantir might do the groundwork in fishing out the real upcomers in the quantum space to bolster Palantir's ecosystem. I'm going on a limb to state "I believe" Palantir can grow into a 1k-1.5k share price without splits. And I'm going to daringly state this within the next 10-15 years. My case is similar to Moores law, as processing power tend to double every 18 months, I think the demand for proven commercial AI will occur in lockstep. But that's only for the long term holders with legendary investor mindsets. All of those original FAANG stocks gradually made it over 1k before multiple stock splits. Now I don't know at this point how that will happen. But that's the joy in seeing how AI capabilities in real world applications unfold. But I do know that Palantir can in fact be in the top 10 stocks S&P with the next 10-15 years.
Arkeym
I appreciate your hard work and analysis. Thanks to you, I've learned to remove my emotions on bears days. In the past, the market punished me for that. Now, I just DCA, and plan for the future. Thanks for your insight!
Mikaelyn Austin
#PalantirSince17 should definitely start trending ❤️
Generico Fakero
Listen to the members zoom we had yesterday. Timing the market is a bad idea. Before earning or after earnings. Just stick to your DCA schedule
Tom B
Would you buy before earnings?
Generico Fakero
❤️
Generico Fakero
You got it
Generico Fakero
🫡
Generico Fakero
Appreciate you
Jack M
Tom, once again thank you for the pertinent and comprehensive report. I watch all your videos and read all your posts, you are my trusted source and mentor as I'm transitioning to retirement. I wish I had the benefit of your wisdom years ago so I share it with my kids. Bravo, well done. PLTR since $17.
Leo Lin
Thank you for the thorough analysis!
Leonard Krause
Thank you, Tom. Excellent, as usual.
Ryan McLay
Excellent piece Tom! Very telling of the whole story!
Generico Fakero
Apparently it’s a hype company that ain’t worth $5 so we all just got very lucky 🤣
Sharon Lombardo
Tom! Thanks to you I invested in palantir 6 months ago and am up 115 %. Alex Karp is the greatest CEO ever
