Palantir Soars on Government Deals as Valuation Debate Lingers

June 03, 2025 at 10:52 AM EDT

Palantir United States Defense System: This image is an original composition by MarketBeat using licensed and editorial elements. Not for redistribution.

Palantir Technologies Inc. (NASDAQ: PLTR) continues to make bullish headlines that positively impact the company’s stock price. One of the most recent headlines was that Fannie Mae (OTCMKTS: FNMA) launched its AI-powered Crime Detection Unit and announced that Palantir would be a key technology partner.

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The unit’s mission is to combat mortgage fraud in the U.S. housing market. To accomplish this, Palantir will help create a platform that combines machine learning and AI to analyze millions of datasets with the goal of finding fraudulent patterns that have been undetectable by traditional measures.

The partnership will initially focus on Fannie Mae’s multifamily housing business. However, the contract may expand to include Fannie’s “cousin,” Freddie Mac (OTCMKTS: FMCC).

The contract is the latest example of Palantir’s close ties to the U.S. government, which accounts for over 50% of the company’s revenue. In fact, also in May, Palantir announced an expanded contract with the U.S. Department of Defense’s (DoD) Maven Smart System, giving Palantir its first million-dollar contract.

This Golden Ticket Could Keep PLTR Stock Near Record Highs

Another catalyst for Palantir is its inclusion as a key strategic partner in the Trump Administration’s plan for a Golden Dome strategic defense initiative. The idea is for the United States to have a system similar to the Iron Dome that protects Israel, but at a much larger scale.

Palantir would be the key software provider due to the company’s expertise in real-time operational dashboards and autonomous threat response.

Plus, the company will likely be a key link in integrating data from satellites, radar, and drones across the country. It’s already doing some of that in its role with the Space Development Agency (SDA).

PLTR stock hit a record high on May 30 before falling back at the close. However, the stock reclaimed and then surpassed that record high when the market opened on Monday, June 2.

Heading into the close, the stock had fallen back from the high but was still above the May 30 high. That’s a bullish pattern that could mean that the floor for PLTR stock may be higher than analysts had previously expected.

The impact of these contracts on the company’s top and bottom lines won’t be known until the company reports earnings in August. In the meantime, investors should expect volatility due to real or perceived concerns about the company’s valuation.

One of the arguments against Palantir’s valuation concerns the company’s revenue relative to its market cap. However, the strong growth in Palantir’s market cap over the last five years may continue longer than the skeptics expect.

A Different Consideration Regarding the Stock’s Surging Market Cap

Palantir has become one of the larger technology stocks. Its market capitalization of $311 billion (as of June 2, 2025) has increased sharply in the last five years. The two key drivers of market cap growth are a company’s stock price and the number of shares outstanding.

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In the case of Palantir, many investors would immediately think that the stock price growth is the primary catalyst for the stock’s market cap. It has been a significant contributor. PLTR stock is up more than 500% in the last 12 months. However, unlike those who dismiss it as a meme stock, the stock price growth is fueled by 33.45% revenue growth and an 80% gross margin.

But investors shouldn’t be so quick to ignore the growth in outstanding shares, which has climbed sharply since PLTR stock went public in 2020.

One reason for the increase in outstanding shares is that many investors are skeptical about the company. That is, the number of shares that company insiders have cashed in.

The knee-jerk reaction from investors to insider selling is almost always negative. However, executive compensation is typically tied to stock options. With that in mind, it’s always good to remember that these insiders have life events, including paying taxes, that require liquidating their stocks.

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Palantir Soars on Government Deals as Valuation Debate Lingers

This Golden Ticket Could Keep PLTR Stock Near Record Highs

A Different Consideration Regarding the Stock’s Surging Market Cap

Where Should You Invest $1,000 Right Now?

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