Palantir Soars on Solid Q4 Earnings, Cautions on DeepSeek: ETFs to Buy

Palantir Technologies PLTR shares have surged 500% over the past year, jumped more than 38% so far this year and added about 24% on Feb. 4, 2025, reflecting upbeat fourth-quarter earnings. Palantir reported earnings of 14 cents per share, beating the Zacks Consensus Estimate of 11 cents on an adjusted basis.

Palantir Technologies, which belongs to the Zacks Technology Services industry, posted revenues of $827.52 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.44%.

This compares to year-ago revenues of $608.35 million. The company has topped consensus revenue estimates in each of the last four quarters. Over 40% of Palantir’s fourth-quarter sales were from U.S. government contracts.

Upbeat Expectations

The company projected its first-quarter and annual revenues to surpass Wall Street’s expectations. The company's shares surged massively in after-hours trading on Monday, driven by the fiscal 2025 revenue forecast of $3.74 billion to $3.76 billion, exceeding the analyst consensus of $3.54 billion.

Palantir forecast its revenues for the March quarter to remain between $858 million and $862 million, ahead of Zacks Consensus Estimate of $797.85 million. Expanded tariffs ordered by Trump on Saturday may further fuel demand for Palantir’s analytics services, particularly in supply chain and logistics management, according to Palantir's Chief Revenue Officer Taylor.

AI Platform Gets a Boost From Generative AI

Palantir's AI platform, AIP, has seen increased demand, driven by businesses eager to deploy generative AI technology. The platform helps test, debug code, and evaluate AI-related scenarios, contributing to Palantir’s strong sales performance.

Government Contracts Remain Key for Palantir

Palantir is known for serving government entities, including providing software for military operations like visualizing army positions. Despite its reliance on government spending, Palantir is focused on reducing this dependency and is gradually shifting toward commercial clients. The company expects its U.S. commercial revenue to grow at least 54% in 2025, reaching over $1.80 billion.

Palantir Warns Against Using Chinese AI Startup DeepSeek's Models

Palantir has advised its clients to avoid using DeepSeek's AI models, a Chinese startup, according to the company’s Chief Revenue Officer, Ryan Taylor. This recommendation comes after concerns were raised about the United States' dominance in AI technology.

“We would strongly discourage it (DeepSeek) and don't think any customer in the U.S. government will be able to use it,” Taylor said, as quoted on Reuters. U.S. officials are currently examining the national security risks associated with DeepSeek, with White House press secretary Karoline Leavitt noting the investigation last week.

Palantir further discouraged commercial clients from adopting DeepSeek’s AI models. Taylor emphasized that while the company would continue to support clients choosing to use DeepSeek, it would strongly recommend against it.

Palantir-Heavy ETFs in Focus

Zacks Rank #2 (Buy) Palantir's stock is high-growth in nature. The stock comes from a top-ranked Zacks Technology Services Industry (top 36%). Its huge exposure to the government space is a key winning point in investment rationale.

Investors can ride out these positives with PLTR-heavy exchange-traded funds (ETFs) like Global X Defense Tech ETF SHLD, Tuttle Capital Self Defense Index ETF GUNZ, ProShares Big Data Refiners ETF DAT, REX AI Equity Premium Income ETF AIPI and Adaptiv Select ETF ADPV.

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