Why Palantir Is the Best S&P 500 Stock Today

(Image credit: Stefan Wermuth/Bloomberg via Getty Images)

Palantir Technologies (PLTR) is the best S&P 500 stock Tuesday by a mile after the software provider beat top- and bottom-line expectations for its fourth quarter and issued a strong outlook for its first quarter and full fiscal year. At last check, shares were up more than 20%.

In the three months ending December 31, Palantir's revenue increased 36% year over year to $827.5 million, boosted by 52% growth in the U.S. to $558 million. Its earnings per share (EPS) rose 75% from the year-ago period to 14 cents.

"Our business results continue to astound, demonstrating our deepening position at the center of the AI [artificial intelligence] revolution," said CEO Alex Karp in a statement. "Our early insights surrounding the commoditization of large language models have evolved from theory to fact."

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The results beat analysts' expectations. Wall Street was anticipating revenue of $776 million and earnings of 11 cents per share, according to CNBC.

For its first quarter, Palantir said it expects to achieve revenue in the range of $858 million to $862 million, ahead of the $799 million in revenue analysts are expecting. For all of 2025, the company anticipates revenue of $3.741 billion to $3.757 billion. This compares to analysts' estimates for revenue of $3.52 billion.

"We are still in the earliest stages, the beginning of the first act, of a revolution that will play out over years and decades," Karp wrote in his Letter to Shareholders. "This is not an incremental advance or marginal acceleration of our business. This is a new phase. And the momentum we are seeing across sectors, both commercial and government, is unlike anything that has come before."

Is Palantir stock a buy, sell or hold?

Palantir's share price has surged fivefold in the past 12 months, yet Wall Street is on the sidelines when it comes to the large-cap stock.

According to S&P Global Market Intelligence, the average analyst target price for PLTR stock is $73.90, representing a discount of nearly 30% to current levels. Additionally, the consensus recommendation is Hold.

Still, there are bulls to be found and financial services firm Wedbush is one of them. It maintained an Outperform rating (equivalent to a Buy) on the AI stock after earnings and raised its price target to $120 from $90.

"There are some transformational tech stocks that come along every decade and change the landscape ... Palantir is one of them in our view and proved it for all the tech world to see last night," says Wedbush analyst Daniel Ives. "Palantir is helping lead the AI Revolution into the use case phase as its AIP [Artificial Intelligence Platform] product moat is unmatched in our view."

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Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.