Adria Cimino, The Motley Fool

Wed, Jun 25, 2025, 2:05 AM5 min read

• Palantir shares have soared more than 80% in the first half.

• This has resulted in a very lofty valuation for the stock and questions about whether gains will continue.

• 10 stocks we like better than Palantir Technologies ›

As indexes slid earlier in the first half, so did highflier Palantir Technologies (NASDAQ: PLTR) -- but not for long. Investors in the tech stock seemed to shrug off concerns about a potential economic slowdown and halt in spending as they piled into shares of the software company.

Even after the stock's spectacular performance, here's why you shouldn't sell Palantir before the second half of 2025 (which begins Tuesday, July 1), and instead, hold on for the long term.

First, though, a quick look at why Palantir has become so popular with investors. Palantir's business may not sound extremely glamorous -- its software helps customers aggregate their data and make better use of it. But this platform actually is producing game-changing results -- from better performance on the battlefield for the military to streamlined maintenance or improved supply chain operations for commercial customers.

And Palantir, seeing the potential of artificial intelligence (AI), launched its Artificial Intelligence Platform (AIP) two years ago to add AI to an already strong data analysis system. Thanks to high demand for AIP, investors see Palantir as a current and future winner in the AI boom.

This focus on AI also has helped Palantir drive growth in its commercial business. Over most of its 20-year history, Palantir's biggest customers were governments.

In recent times, though government revenue continues to increase in the double-digits, commercial customers have joined this growth story. Throughout the latest quarter, both government and commercial revenues have climbed in the double digits. And the number of commercial customers and value of their contracts have skyrocketed.

About four years ago, Palantir had 14 U.S. commercial customers -- today, this number exceeds 430. And in the recent quarter, U.S. total commercial contract value climbed 183% to a record of $810 million.

All this helped Palantir stock soar more than 80% in the first half -- after already advancing 340% last year to deliver the best performance in the S&P 500 (SNPINDEX: ^GSPC).

Even concerns that President Donald Trump's import tariff plan may weigh on the economy didn't prompt investors to turn their backs on Palantir for very long. The stock slipped from an earlier high and stumbled through March and April before strongly rebounding.