
Company background
Founded in 2003 and headquartered in the United States, Palantir is a leading US analytics software company that helps large organizations integrate and analyse large datasets to improve decision-making and operations. Its key customers include government agencies and commercial enterprises across a wide range of industries worldwide.
We believe Palantir has captured just 2.4% of its US$119bn 2020 TAM, and with AI software growing 25%+ CAGR, the TAM has likely expanded, supporting significant upside. Core products such as Ontology, along with AI features added through AIP and bundled into Palantir’s broader offerings, have supported sales growth by accelerating offerings adoption and expanding use cases across enterprises.
Investment highlights
+ Expanding the commercial market beyond defence. Palantir’s Ontology moat is driving 50%+ YoY commercial revenue growth, led by large US enterprises over the next two years. US commercial revenue is projected to reach 73% of total commercial sales in FY25e, supported by deal values doubling YoY in 3Q25. Growth is fuelled by enterprise demand to deploy AI at scale using Palantir’s Ontology visualization tools, and AIP with LLMs, with AIP Bootcamps shortening sales cycles. Expansion into new sectors from 60 industries in 2021 to 90 in 2024 broadens the company’s commercial addressable market and adoption.
+ Stable government revenue from entrenched US defence deals. Palantir’s government revenue is expected to grow 43% in FY25e, led by the US (76% of the segment). This growth is driven by the company’s established position in US government, helping secure large deals amid geopolitical tensions, including the US Army’s 10-year US$10bn deal and the expansion of the Maven Smart System. We view the AIP platform as a critical upsell lever, adding AI capabilities to existing Gotham deployments to capture rising US intelligence spending.
+ Palantir remains cash-rich with minimal cash outflow. We expect cash and equivalents to reach US$8.4bn in FY25e, accounting for over 80% of total assets. Operating cash flow to grow ~80% YoY in FY25e, supported by higher net income and stock-based compensation, lifting CFO margin from ~40% to ~50%. CAPEX remains low with FY24 PPE purchases at just 1% of operating cash generated, and Palantir has been debt-free since 2022, funding growth entirely through internally generated cash.
We initiate coverage with a BUY recommendation and target price of US$208.
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Fahmi covers the US technology sector and graduated with a Bachelor of Finance from the Universiti Malaya.