Palantir stock is down 10% to start in 2025. Is it time to buy a dip in this explosive AI stock?
After the spectacular 2024, when it increased by 340%, Palantr (NASDAQ: PLTR ) 2025 was not good. The stock is down more than 10 percent to start the year. Given how hot Palantir artificial intelligence (AI) is, many investors may think this is a diving buying opportunity.
Palantir is certainly growing fast and has an impressive product, but one thing gives me pause as a potential investor.
Palantir has been in the AI game longer than most companies. It was founded in May 2003 and was created to provide AI solutions to government clients. This proved to be a huge success, and the company eventually expanded into the commercial side.
Palantir’s software essentially ingests data, runs it through an AI platform custom-built for each client, and displays this data on a dashboard that allows decision-makers (whether in the military or an insurance company) to make as informed a decision as possible. That was the starting point for Palantir’s software, but its latest product has generated significant interest, especially in the US business sector.
Palantir’s Artificial Intelligence Platform (AIP) gives its users the tools they need to integrate AI models into their workflows, rather than something used on the side. AIP also has the ability to integrate AI agents to automate tasks normally performed by humans. With many prominent AI CEOs declaring that 2025 will be the year of agency AI, Palantir is a stock to watch as one of the leaders in this space.
With leading production in such an important position, it’s no surprise that Palantr’s growth has been strong. In Q3, Palantir’s total revenue grew 30 percent year-over-year to $726 million. However, the U.S. business sector grew faster than average, with revenue rising 54 percent year over year to $179 million. Even U.S. government revenue is above average, rising 40% year-over-year to $320 million.
Clearly, the US is outpacing the rest of the world’s demand for AI software, and a key part of Palantir’s investment theory is that while the rest of the world will eventually have the same AI demand as the US, there is still plenty of room for growth. US
Palantir has reached most of its government customers, just scratching the surface of its US commercial potential. It only has 321 US business customers, so there’s clearly room for expansion.
There’s still plenty of upside for Palantir, but the stock has one glaring problem.
