Should You Buy Palantir Stock Before May 5?

So far, 2025 has been a tough one for growth investors. After nearly two years of parabolic gains witnessed in the technology sector, the stock market has started to take a breather thanks to ongoing turbulence around President Donald Trump's new tariff policies.

While traditional no-brainer artificial intelligence (AI) opportunities such as the "Magnificent Seven" have lost their allure for the time being, enterprise software darling Palantir Technologies (NASDAQ: PLTR) is still managing to win over investors.

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As of market close on April 29, shares of Palantir have gained 53% this year -- making it the top performer in the Nasdaq-100 by a mile. With first-quarter earnings scheduled for next Monday (May 5), investors may be wondering if now is a good time to hop on the Palantir train.

Let's dig into what investors should expect from the Q1 report, and assess if buying the stock right now is a good idea.

What should investors expect from Palantir's Q1 report?

Back in February, Palantir published financial results for the full year 2024. In the report, management included the following financial guidance.

Data source: Palantir investor relations.

As the table above illustrates, Palantir previously forecast $860 million in revenue and $356 million in adjusted operating income at the midpoint of its guidance. To put this into perspective, this would represent roughly 36% top-line growth and 57% growth in operating income.

Normally, I'd say that this level of sales growth and profit margin expansion may be a bit aggressive. However, AI has been more than just a reliable catalyst for Palantir over the last couple of years.

The introduction of the company's Artificial Intelligence Platform (AIP) has transformed Palantir from primarily a data specialist working with the U.S. military to a more prolific software platform used by some of the world's leading enterprises in the private sector, too.

With that in mind, there are a number of items that should be top of mind for investors heading into Palantir's earnings report next week.

Image source: Getty Images.

A number of factors could change Palantir's near-term trajectory

The first, and probably most obvious, point I'll bring up is the tariff situation. Even though it may seem like the tariff rhetoric has been dragging down the stock for a while now, it's actually been less than a month as I write this. At a high level, investors do not yet know how dramatically tariffs are impacting corporate budgets.

It's entirely possible that large enterprises (Palantir's target customer) are operating under tighter cost controls and may reduce spend in areas such as software or IT. On the flip side, though, Palantir's AI software can actually help businesses create detailed models to analyze how tariffs will impact their operations -- allowing them to form new strategies in real time.

In addition, investors already know that the Pentagon is in the middle of a hefty cost-reduction exercise, seeking to reduce its budget by 8% annually over the next few years. Considering more than 50% of Palantir's revenue comes from the public sector -- much of it from defense engagements with the military -- it's entirely possible that the company's main source of growth could be in jeopardy.

However, as I expressed in a prior article, Defense Secretary Pete Hegseth appears committed to enhancing the Pentagon's reliance on critical software infrastructure. For this reason, Palantir could actually benefit from operational changes at the Department of Defense (DOD) and be in a position to replace legacy providers that are not performing up to par.

My overarching point here is that tariffs and budget reductions at the DOD could potentially be tailwinds or headwinds for Palantir -- and at this point in time, investors simply don't know how these situations are impacting the company yet.

Is Palantir stock a good buy right now?

As the chart below shows, Palantir stock clearly has quite a bit of momentum fueling it right now. Just over the last month, Palantir stock has climbed by 35% while the S&P 500 and Nasdaq Composite were both basically flat. With earnings right around the corner, I think it's a coin toss as to which direction Palantir stock could go following the Q1 report.

PLTR data by YCharts

Generally speaking, I don't encourage investors to follow momentum stocks. Many times, these stocks can be heavily influenced by day traders and leave unsuspecting investors holding the bag when they least expect it. Given the number of variables that could dictate the next direction of Palantir stock, I think it's best to wait until Q1 earnings are published before making a decision to buy.

My hope is that Palantir's management will provide details about how tariffs and the budget cuts at the Pentagon are impacting its business. At the very least, this would help clarify what the company's near-term prospects look like and if the guidance shared above is still attainable.

From a longer-term view, however, I still see Palantir as a great opportunity for growth investors. I think the prudent approach to an investment in Palantir is to use dollar-cost averaging over the course of many years. Buying at different price points and at different junctures throughout the AI revolution should help mitigate some of the risk surrounding a volatile stock such as Palantir, while making the precise timing of your buys less of a concern.

Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.