Shares of Palantir Technologies (PLTR) jumped 8% on Thursday after President Trump announced a new trade deal with the U.K. The surge came as the market as a whole rose on the news with the Dow Jones Industrial Average and the S&P 500 both up 0.6%, but the Nasdaq 1%. All the indices gave back a little by the end of the trading day.
The reason behind Palantir's rise, however, was the potential for the artificial intelligence data analytics gaining new business out of the agreement. Although not mentioned by name, and no specific allusion to AI was called out, the White House fact sheet released with the announcement highlights that the trade deal will "close loopholes and increase U.S. firms' competitiveness in the U.K.'s procurement market."
This means Palantir may be able to win new contracts with the U.K. government and businesses. In 2024, the United Kingdom contributed 11% of PLTR's total revenue, or $304.6 million, up 29% from the prior year. However, its foreign net operating losses, primarily from the U.K., more than doubled last year to $946.2 million.
U.K. revenue, though, jumped 41% in PLTR's first quarter results that were released earlier this week.
Palantir Technologies business is already growing rapidly and the AI Big Data stock raised its full-year guidance, saying it expects 36% revenue growth in 2025, with free cash flow coming in a range of $1.6 billion to $1.8 billion.
Yet PLTR's lofty valuation can't be ignored. The stock trades around 500 times earnings, which means it would take an investor half a century to recover their initial investment, assuming earnings remained constant.
It's an expensive valuation that isn't sustainable, even with the strong growth it enjoys. Investors should wait for a correction in PLTR stock rather than chase it higher.
