TLDR
- Wall Street analysts project Palantir could grow revenue 70-80% in 2026 on AI platform momentum
- Q3 U.S. commercial sales exploded 121% year-over-year as enterprises adopt AIP technology
- Citi maintains buy rating with $235 target while PhillipCapital initiates coverage at $208
- Forward P/E multiple compressed to 170x from October peak of 309x during sector selloff
- Contracted backlog grew 65% to $2.6 billion, signaling strong future revenue pipeline
Palantir Technologies dropped 17% over three months. Two analysts think the weakness won’t last.
Palantir Technologies Inc., PLTR
Citi’s Tyler Radke kept his buy rating and lifted his target to $235. The new price implies 42% gains from current levels.
Radke says Palantir broke traditional software valuation rules. Growth is accelerating while profit margins expand at the same time.
The analyst sees defense modernization as a key driver. Government agencies are increasing IT budgets and upgrading legacy systems.
Radke forecasts 51% growth in the government segment. Total company revenue could climb 70-80% this year on AI demand.
The Artificial Intelligence Platform is attracting customers across industries. Both private companies and public agencies are implementing the technology.
Enterprise Customers Drive Results
Third quarter numbers back up the optimistic outlook. Total revenue rose 63% year-over-year to $725.5 million.
U.S. commercial was the standout performer. This segment jumped 121% compared to last year.
Sequential growth reached 29% from the previous quarter. The acceleration shows demand is building, not slowing.
Commercial now represents 34% of Palantir’s total business. Just a few years ago it was a much smaller contributor.
AIP is the engine behind this expansion. Companies are finding practical applications for the platform across operations.
Government customers are taking notice. They’re starting to deploy AIP after seeing commercial sector results.
The company’s contracted backlog hit $2.6 billion, up 65%. These are signed deals that will flow through as revenue.
Management bumped up their full-year forecast. They now expect $4.4 billion in revenue for 53% growth.
U.S. commercial alone should reach $1.43 billion. That would mark 104% expansion for the segment.
Stock Looks Cheaper Now
Paul Chew at PhillipCapital launched coverage with a buy rating. His $208 price target indicates 32% upside potential.
Chew takes a different valuation approach. He measures Palantir against its own trading history instead of comparing to peers.
The forward price-to-earnings ratio peaked at 309x in late October. Today it sits around 170x.
That’s below the one-year average of 190x. The recent AI stock selloff pushed the multiple down.
Chew calculates Palantir has only captured 2.4% of its market opportunity. The addressable space was $119 billion in 2020.
AI software is expanding over 25% per year. The total market is actually larger now than it was then.
The analyst expects $4.2 billion in 2025 revenue. That represents 47% year-over-year growth.
Profit should nearly double this year as margins improve. Commercial revenue is now outpacing government sales growth.
Chew projects the segments will expand 51% and 43% respectively. Both are delivering strong performance.
Palantir operates in 90 different industry sectors now. That’s up from 60 sectors just three years ago.
The company scored 114% on the Rule of 40 in Q3. This measure combines revenue growth and profit margin percentage.
Wall Street consensus remains cautious. Six analysts rate it a buy, ten say hold, and two recommend selling.
Average price target sits at $189.94 across all analysts. That still implies 21% upside from current prices.
The stock has climbed 2,190% over three years. But the path included at least ten separate pullbacks of 20% or more.
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