PLTR Analysis: Palantir's Q4 Blowout Delivers 43% Net Margins and $2.1 Billion in Free Cash Flow — But the Pentagon's Anthropic Ban Adds a New Risk Layer
Palantir Technologies (PLTR) reported Q4 2025 earnings on February 17 that exceeded nearly every expectation. Revenue hit $1.41 billion for the quarter — a 59% acceleration from the $884 million posted in Q1 — while net income surged to $609 million, translating to a staggering 43% net margin. Free cash flow for the full year reached $2.1 billion, nearly doubling FY2024's $1.14 billion. The company also guided for 115% growth in U.S. commercial revenue, signaling that its AI Platform (AIP) is finding product-market fit beyond government contracts. Yet the stock sits at $137.19, down 34% from its $207.52 all-time high. At a $314 billion market capitalization, Palantir trades at 174x trailing earnings and 302x trailing sales — multiples that make even the most aggressive growth stocks look modest. And a new headwind has emerged: the Pentagon's designation of Anthropic as a supply chain risk following Trump's ban on government AI use forces Palantir to potentially sever ties with a key AI partner embedded in its platform. This analysis examines whether Palantir's extraordinary financial trajectory justifies its extraordinary valuation, and what the Anthropic risk means for the bull case.