Palantir's Political Storm and Industrial Ambitions: A Tale of Two Growth Engines

Palantir forecasts $7.19B revenue for 2025, up 61%, but stock lags 33% below highs amid IRS data-sharing lawsuit, congressional probes, and new commercial wins.

The numbers tell a story of breakneck expansion. Palantir expects first-quarter revenue of roughly $1.53 billion, with the full-year figure pegged at around $7.19 billion — a 61% jump. Wall Street is even more bullish, forecasting $1.54 billion for Q1 alone and earnings per share of $0.28, a 115% year-over-year surge. Yet the stock trades at €120.34, some 33% below its 52-week high of €179.86, and has shed about 16% since January. The disconnect between operational momentum and market sentiment is stark — and it's being shaped by forces far beyond the balance sheet.

The IRS Contract That Won't Go Away

A newly unearthed contract reveals that the Internal Revenue Service's criminal investigation division has been using Palantir's Lead and Case Analytics platform since 2018 — at a cost of $130 million. The system, which blends Palantir's Gotham and Foundry applications, sifts through tax returns, bank records, Affordable Care Act data, and financial crime network information, including cryptocurrency transactions involving Bitcoin and Ethereum. The contract language describes the tool as capable of finding "the needle in the haystack."

The watchdog group American Oversight, which published the documents, isn't buying that framing. Director Chioma Chukwu put it bluntly: "When the government can map relationships, track behavior, and generate investigative leads across datasets — the question isn't just what it can do, but who it will be used against." The organization has filed an 11-page FOIA lawsuit against multiple federal agencies, alleging the Trump administration is stonewalling requests about how agencies share and use sensitive personal data through Palantir systems. The suit follows a March 2025 executive order from President Trump explicitly directing agencies to lower barriers to cross-departmental data sharing.

Adding to the political heat, 30 members of Congress — including Representatives Dan Goldman, Nydia Velázquez, and Senator Ron Wyden — have demanded answers from ICE and the Department of Homeland Security about Palantir's role in collecting data on U.S. citizens. Palantir declined to comment on the inquiries.

Steel, Skies, and the Pentagon

While the political noise intensifies, the commercial engine is firing on multiple cylinders. Cleveland-Cliffs, the U.S. steel giant, signed a three-year contract on April 28 to integrate Palantir's enterprise AI platform into its production planning, order entry, and operations. CEO Lourenco Goncalves didn't mince words: the platform "allows us to solve problems that people simply cannot solve." The deal followed a pilot program.

Then there's the FAA. Palantir is competing alongside Thales and Airspace Intelligence for the SMART program, one of the largest civilian AI contracts in the country. The goal: extend collision prediction from the current 15-minute window to as long as two hours. Congress has allocated $12.5 billion for the air traffic control overhaul, though the FAA pegs the total need at $32.5 billion. Palantir has already secured a smaller data analytics contract with the agency.

The Pentagon remains the bedrock. A Heeresvertrag — an army contract — carries a total potential value of up to $10 billion. Analyst Louie DiPalma of William Blair points to a Pentagon budget request of $2.3 billion for Palantir's Maven Smart System, providing multi-year revenue visibility. Last quarter, the company posted a record total contract value of over $4.2 billion, and its Rule-of-40 score sits at 127%, signaling an unusually strong balance between growth and profitability.

The Political Risk Premium

Palantir's political entanglements aren't limited to the IRS. In the UK, a contract with the National Health Service continues to stir debate. In New York, a similar deal with the city's public hospital network was terminated after public outcry. The pattern is clear: each new government contract brings both revenue and reputational exposure.

Yet the business keeps growing. In April, the U.S. Department of Agriculture awarded Palantir a $300 million framework contract to modernize government services. Homeland Security contracts are also in the pipeline. U.S. commercial revenue is expected to exceed $3.1 billion this year.

Of 21 Wall Street analysts covering the stock, 14 rate it a buy, five a hold, and two a sell. The average price target stands at $186.47. The stock's RSI of 40.6 suggests a neutral to slightly oversold position.

The Earnings Verdict

Palantir reports Q1 results after the U.S. market close on May 4. The company's own guidance is tight: revenue between $1.532 billion and $1.536 billion, with adjusted operating income of $870 million to $874 million. The company has beaten consensus earnings estimates for ten consecutive quarters.

The question isn't whether Palantir can deliver strong numbers — the track record suggests it will. The real test is whether the market can look past the political controversy and focus on the industrial and defense growth story. The FAA bid alone represents a potential $32.5 billion addressable market. The Cleveland-Cliffs deal signals that heavy industry is ready to embrace AI. And the Pentagon's $2.3 billion budget request for Maven Smart System provides a multi-year revenue floor.

But with the stock down a third from its peak and political risks multiplying, the earnings call on May 4 will need to do more than just beat estimates. It will need to convince investors that the growth story is bigger than the headlines.