MIT NANDA’s paper, “The GenAI Divide: State of AI in Business 2025,” released in July, has worried many investors.
The report said that despite $30 to $40 billion in enterprise investment into generative artificial intelligence development, 95% of organizations are getting zero return.
This statistic sparked fears that the AI bubble is about to burst.
If there’s a company that doesn’t need to worry about successfully leveraging its AI, it’s Palantir.
NANDA paper states: “The primary factor keeping organizations on the wrong side of the GenAI Divide is the learning gap, tools that don’t learn, integrate poorly, or match workflows.”
Palantir seems to have predicted these problems, as it offers “boot camps” to its customers, where they can learn to use their tools properly.
But what really sets the company apart are its forward-deployed software engineers (FDEs), who are tasked with embedding directly with its customers to configure Palantir’s existing software platforms to solve their problems.
Palantir Technologies CEO Alex Karp said Q2 2025 was phenomenal for the company.Image source: Kevin Dietsch/Getty Images
On August 4, Palantir (PLTR) reported its results for Q2 of fiscal 2025.
Alex C. Karp, co-founder and CEO of Palantir Technologies, said that Q2 was phenomenal and that the company obliterated the rule of 40, scoring 94%. (The rule of 40 is when the company’s annual revenue growth plus its EBITDA margin in percentage terms exceeds 40.)
Revenue growth of 48% year-over-year and 14% quarter-over-quarter to $1.004 billion
Net income of $327 million, representing a 33% margin
Adjusted income from operations of $464 million, representing a 46% margin
Cash from operations of $539 million, representing a 54% margin
Earnings per share of $0.13
Adjusted EBITDA of $471 million
Cash, cash equivalents, and short-term U.S. Treasury securities of $6.0 billion
Revenue of between $4.142 to $4.150 billion
Adjusted income from operations of between $1.912 to $1.920 billion
Adjusted free cash flow guidance of $1.8 to $2.0 billion
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During the earnings call, Palantir Chief Revenue Officer Ryan Taylor said: “LLMs, on their own, are at best a jagged intelligence divorced from even basic understanding. In one moment, they may appear to outperform humans in some problem-solving task, but in the next, they make catastrophic errors no human would ever make.”
“By contrast, our Ontology is pure understanding, concretized in software,” Taylor added. “LLMs simply don’t work in the real world without Palantir. This is the reality fueling our growth.”
In August, Palantir’s Foundry software was given a blanket purchase agreement (BPA) from the US State Department to support operations under the ORION program. The BPA removes future possible administrative hurdles as Palantir continues to get more contracts with the State Department.
On September 4, Palantir announced a five-year expansion of its partnership with Lear Corporation, an automotive seating and E-Systems company. Lear will broaden its use of Palantir Foundry, as well as Palantir’s Warp Speed manufacturing operating system and AIP, across its global manufacturing footprint.
On the same day, it also announced a collaboration with Lumen Technologies, which brings Palantir’s Foundry and AIP to Lumen.
Bank of America analyst Mariana Perez Mora and her team attended Palantir’s Artificial Intelligence Platform Conference in San Francisco. After watching the presentations, interactive demos, and roundtable discussions, as well as Palantir’s customers’ testimonials, they updated their opinions on Palantir shares.
Palantir’s customers shared how the Ontology architecture and FDEs help them discover data and enhance operations.
Analysts said: “This positive feedback is in line with the growing recognition on earnings calls, with companies across industries eager to show that they are working with PLTR to streamline operations.”
As of Q2 2025, the company’s top three customers were up 40% year over year, and the top 20 were up 30%. The team estimated that in a budget-constrained environment, Palantir should outperform the industry growth.
Lower-than-expected AI-platforms market growth
Faster-than-expected commoditization
Competitors catching up with technologies
Stronger-than-expected resistance from government customers to use commercial off-the-shelf solutions.
Perez Mora reiterated a buy rating and the target price of $180, based on a 15 enterprise multiple estimate for 2035. She used a longer-term valuation methodology to reflect the sustained high-growth and profitability profile of the company.
