Analysts have upgraded Palantir Technologies (PLTR) stock following its fourth-quarter earnings results, which exceeded expectations, and highlighted the company’s “relentless” potential in artificial intelligence (AI). The stock price surged approximately 25% in early trading, bringing its year-to-date increase to nearly 40%.
Analyst upgrades reflect strong demand
DA Davidson analyst Gil Luria maintained a Neutral rating on Palantir, but raised the price target from $47 to $105. Luria attributed the “outstanding” quarterly performance and accelerating revenue growth to strong U.S. demand for AI solutions, noting that Palantir is well positioned to assist customers in utilizing large language models (LLMs). Other firms also upgraded their ratings, with UBS increasing their price target from $80 to $105 while keeping a Neutral rating, and RBC Capital raising its target from $11 to $40 but maintaining an Underperform rating.
Despite positive outlooks, RBC expressed concerns about Palantir’s growth potential and product differentiation, especially in light of expectations from increased defense spending under President Trump.
Palantir’s 22% stock surge is grabbing headlines but this number matters more
Palantir’s latest results showed adjusted earnings of 14 cents per share and $828 million in revenue, surpassing analyst expectations of 11 cents per share and $776 million in revenue. The company also provided optimistic guidance, forecasting first-quarter revenue between $858 million and $862 million, above the $799 million estimate. For the full year, Palantir projects sales of $3.74 billion to $3.76 billion, exceeding the expected $3.52 billion.
The company reported a remarkable 340% increase in stock value in 2024, driven by its growing AI platform, with government contracts contributing 55% to its revenue. CEO Alex Karp highlighted that U.S. commercial revenue grew by 64% while U.S. government revenue increased by 45% year over year, and he expects 54% growth in U.S. commercial sales for 2025.
During a shareholder letter, Karp emphasized the transformative momentum in their commercial and government segments, calling it “unlike anything that has come before.” He characterized the company’s trajectory as the beginning of a revolution in the U.S. AI landscape, asserting Palantir’s commitment to maintaining U.S. technological superiority and national security.
Despite the positive outlook, Deutsche Bank analyst Brad Zelnick pointed out Palantir’s high price-to-sales ratio of 70, which significantly exceeds the S&P average of 3 and even Nvidia’s 35. Zelnick remains cautious, holding a sell rating on the stock while acknowledging the impressive earnings report.
Palantir’s market capitalization reached up to $240 billion following the earnings report, positioning it among notable firms valued at $200 billion or more, including American Express and McDonald’s. This significant rise in value reflects investor enthusiasm amidst the ongoing AI revolution.
CEO Alex Karp’s personal wealth increased by $1.2 billion following the stock surge, while cofounder Peter Thiel’s fortune grew by $2.4 billion. Karp expressed satisfaction with the company’s advancements and its appeal to retail investors during the earnings call, stating, “We’re doing it. We’re doing it. And I’m sure you’re enjoying this as much as I am.”
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Featured image credit: Palantir
