Palantir Technologies Inc. is a company that has become rapidly known for its cutting-edge artificial intelligence (AI) and big data analysis. The company was founded in 2003 with an initial focus on government intelligence and counterterrorism. Since it went public in 2020, it has widely expanded into the commercial sector as well, enabling companies to make data-driven decisions. Palantir describes its objectives stating that “We make products for human-driven analysis of real-world data” highlighting how their predictive analysis meets client needs and utilizes their data to its maximum potential (Palantir, 2025).
(Palantir logo, public domain, via Wikimedia Commons)
Palantir’s value proposition is its ability to take vast amounts of unstructured data and transform it into insights that drive action. This is delivered through various tools and platforms, each serving a different need for its customers. Gotham is a platform by Palantir that is used by government agencies like the U.S. Department of Defense, Palantir’s Foundry was designed for commercial businesses to integrate, visualize and act on their data, and AIP (Artificial Intelligence Platform) allows clients to utilize large language models (LLMs) like ChatGPT alongside their data (Morningstar Equity, 2025).
Palantir helps businesses and governments use all of the information they collect no matter the type of data, bring it together, and make smarter and faster decisions. They stress the importance of understanding one's data and acting on it. This case study will dive into everything Palantir, including its business model, differentiation, financial success, market opportunity, growth outlook, as well as its risks and concerns.
Business Model and Differentiation
Palantir’s business model is built on high-value, high-touch software solutions, meaning they ensure deep integration and customization through customer support and close collaboration with clients. They seek to give customers a smooth and personalized experience. Unlike the products offered by many other companies, Palantir provides deeply customized implementations that become part of the decision-making frameworks of its clients. This “stickiness” or tendency for clients to remain with a service due to its complexity and effectiveness, drives high switching costs and in turn, long-term contracts (Palantir, 2025).
A central part of Palantir’s differentiation is its “ontology framework.” In philosophy, ontology is the study of how things relate to each other in the world. In Palantir’s context, this refers to how different types of data, from spreadsheets to security footage, can be connected, giving a combined view of problems. This is enabled by Palantir’s system which allows users to build an interconnected map of their operations (Morningstar Investment, 2025).
For example, a hospital might use Palantir’s tool, Foundry, to link patient records, doctor schedules, and inventory data. The platform could then suggest how to reduce patient wait times or optimize operating room use. This was demonstrated when Tempa General Hospital partnered with Palantir and reduced patient length of stay by 30%, which translates to better patient outcomes and lower costs, creating a huge impact (Morningstar Equity, 2025).
Palantir’s strategic use of “boot camps” also sets it apart. These short, intensive workshops hook potential clients to Palantir’s capabilities by solving one of their specific problems using real data. This leads to a quick, tangible demonstration of the value, driving customer acquisition–a term that refers to the gaining of new clients for a product or service. As of 2025, this strategy helped drive over 65% year-over-year growth in U.S. commercial revenue (Morningstar Investment, 2025).
Financial Performance
As of June 2025, Palantir’s share price stands at about $131 with a market capitalization of over $320 billion. Market capitalization refers to the total market value of a company’s outstanding shares. However, Morningstar estimates its fair value at $100, suggesting the stock is currently overvalued by about 31%, with a Price/Fair Value (P/FV) ratio of 1.31. Fair value is the estimated worth of a company based on fundamentals, while P/FV shows how much more investors are paying compared to that estimate (Morningstar Investment, 2025).
Palantir has had much financial success, indicating future growth. It maintains gross margins above 80%, which means it keeps a large portion of its revenue as profit after costs of production before operating expenses. This is expected as Palantir is a software service company. Since the software has already been developed, it costs less to deploy to clients. Additionally, Palantir’s Net Revenue Retention (NRR) rate, describing how much more existing customers spend over time, is around 120% indicating that customers not only stay but increase their investment in the platform. An NRR of over 100% says that a company’s revenue from its existing customers is increasing, meaning its clients are spending more and more each year. NRR is a great measure of customer growth and loyalty, both characteristics that Palantir is maintaining (Palantir, 2025).
In the latest quarterly report, Palantir posted 39.9% year-over-year revenue growth, totaling $883 million. Each customer, on average, spends more than $1 million per quarter on Palantir’s services, underscoring the platform’s value and the company’s client relations (Morningstar Investment, 2025).
Palantir is not only growing fast, but doing so profitably. It is costly to stop using Palantir’s platforms once integrated, which secures recurring revenue and thus, long-term financial stability.
Market Opportunity and Growth Outlook
Palantir operates in a sector that is currently undergoing rapid transformation. Analysts estimate that its total addressable market (TAM) could grow to $1.4 trillion by 2033, with more bullish predictions up to $1.6 trillion (Morningstar Equity, 2025). TAM refers to the total potential revenue a company could generate if it captured 100% of its target market. The large TAM of Palantir’s market leaves the company with a lot of room for expansion.
Just as Salesforce became a powerful force in customer relationship management (CRM) in previous years, Palantir is assisting in data-driven decision making and succeeding in similar ways. By enabling the usage of AI to store and analyze data and on top of that generate predictive actions, Palantir is becoming a powerful and essential infrastructure for many (Palantir, 2025).
Much of its future growth is expected to come from the commercial sector, particularly in the U.S. As organizations face complexity and overwhelming amounts of data, tools like Palantir’s AIP (Artificial Intelligence Platform) will become crucial. AIP allows non-technical users to harness the power of large language models (LLMs), such as ChatGPT, paired with their data (Morningstar Investment, 2025).
Risks and Concerns
Despite its strengths, Palantir is not without risks. The most prominent concern is the uncertainty regarding its TAM and future growth. Because its market is still being shaped, predictions concerning this are not solid. If the actual market turns out to be smaller than expected, or if the usage of these platforms slows down, Palantir’s stock could be hit hard (Morningstar Equity, 2025).
Another risk is rising competition, as seen with any business in any market. Palantir has an advantage as a first-comer, establishing itself in a newly emerging market, while being highly capable of performing well. However, the declining costs of AI and accessibility to open-source AI tools that have been witnessed may mean that more players can enter the market. Moreover, blue-chip tech giants like Google or Microsoft could create competing platforms that have the potential to disrupt Palantir’s grasp.
Valuation is another concern. Palantir has a price-to-earnings (P/E) ratio of over 238; this compares a company’s share price to its earnings per share. Additionally, it has a price-to-sales ratio of over 100, which compares the share price to revenue per share. Considering these together, Palantir is considered an extremely high-value software company (Morningstar Investment, 2025). These high valuations mean that investors are expecting perfect execution and sustained scaling from Palantir, as a result, any disappointment in earnings or growth could lead to a quick decline.
Conclusion
Palantir Technologies is not your average software company. It is striving to build the platforms of the future, where AI not only assists but drives decision-making in real-world situations. Through its ontology framework, boot camp approach, and strategic partnerships, Palantir is starting to build its economic moat—a term for a sustainable competitive advantage—reliant on its switching costs and client relations.
Though the valuation may be currently stretched and competition will surely arise, Palantir’s continued innovation and financial performance strongly suggest that it is in the perfect position for long-term success. As an analyst and student of business, I find Palantir to be an important case study in how it combines technical expertise with a strategic vision.
In a world flooded with data, Palantir is reshaping the way that companies and governments utilize this to its maximum potential benefit. It will be exciting to witness the growth Palantir achieves in the coming years.
Sources:
- Morningstar Equity Analyst Report (2025) Palantir Technologies: Equity Research Overview, 30 June. Morningstar Direct. Accessed 5 July 2025.
- Morningstar Investment Detail Report (2025) Palantir Technologies Inc Ordinary Shares – Class A: Financial Profile and Valuation Metrics, 27 June. Morningstar Direct. Accessed 5 July 2025.
- Palantir Technologies Inc. (2025) Form 10-K Annual Report for Fiscal Year Ending December 31, 2024. Available at: https://d18rn0p25nwr6d.cloudfront.net/CIK-0001321655/d75a90fd-c80a-40bd-b60c-1f5b8c10127e.pdf (Accessed: 2 July 2025).
- Palantir Technologies. The original uploader was KarimKoueider at English Wikipedia., Public domain, via Wikimedia Commons. Image.
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