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Analysts react to Palantir’s Q2: “Execution has been stunning”

But they’re still uncomfortable with the valuation.

8/5/25 10:58AM

Market leader and retail trader darling Palantir is on track for its best day since President Trump’s first TACO turn away from massive tariffs juiced the market on April 9.

The reason, of course, is the strong earnings numbers that the data analytics and AI software company reported Monday after the close. (TL;DR: They were great.)

Here are some highlights from the analyst notes we’ve been perusing this morning, which are largely laudatory, albeit with ongoing concern about the company's remarkably high valuation.

Bank of America (Rating: Buy | Price Target: $160 → $180):

“The ‘Rule of 40’ is a financial metric used to compare the sustainable performance of SaaS (Software as a Service) evaluating the right balance between growth and profitability. This rule suggests that strong SaaS should have a revenue growth rate that when added to the profit margin (usually EBITDA) exceeds 40%... Palantir has reached or exceeded this 40% mark over the last 5 years. Recent acceleration in topline growth — coupled with strong profitability — positions the company at unique 80%+ rule of 40 marks over the last three quarters.”

DA Davidson (Rating: Neutral | PT: $115 → $170):

“We believe Palantir is the best story in all of Software. We have raised our estimates and remain positive on the company overall. Palantir scores in the top decile of our coverage on Rule of X. The stock trades at ~103x CY25 revenue, an unprecedented premium to any peer, which is the only reason we maintain our NEUTRAL rating, while raising our price target to $170, from $115.”

Wedbush Securities (Rating: Outperform | PT: $160→ $200):

“We believe Palantir has a ‘golden path to become the next Oracle’ over the coming years and will grow into its valuation.”

Mizuho (Rating: Neutral | PT: $135 → $165):

“PLTR’s recent execution has been stunning, with material upward revisions across both Commercial and Government. That said, the stock’s multiple remains extreme, dramatically above anything else in software. While we continue to worry that the shares could suddenly be subject to material multiple reversion at some point over the next few quarters, PLTR’s uniqueness demands substantial credit. We believe PLTR is increasingly well-positioned to benefit from long-term trends in AI, government digital transformation, and industrial modernization. Reiterate Neutral and raise PT to $165 (from $135).”

Jefferies (Rating: Underperform | PT: $60):

“We commend the strong execution, but valuation at 74x CY26E rev is disconnected from even optimistic growth scenarios (55% 4-yr CAGR = 25x CY28E rev). Maintain Underperform.”

RBC (Rating: Underperform | PT: $40 → $45):

“Stepping back, the quarter and 2025 guidance were ahead of our expectations. However, with shares trading at 78x EV/CY26E revenue, well above peers, we view the risk-reward as negative, although we acknowledge a strong retail tailwind supporting the stock.”

Morgan Stanley (Rating: Equal-weight | PT: $98 → $155):

“The real insight software investors are after is why Palantir has been uniquely able to deliver such best-in-class results. It is increasingly clear that the recipe for such success lies in the company’s world class capabilities in: 1) software defined data integration/ingestion, 2) creating an ontology that allows AI models to have a true understanding of the underlying inter-relationships between data, transactions, employees and customers, 3) workflow automation and grounding state of the art models in enterprise data using the AIP platform and 4) bringing to bear highly technical engineers to help get customer’s complex use cases into production environments.”

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Data center buildout stocks showed impressive resilience to the slump that hit big indexes Tuesday.

In fact, construction companies, server-system makers, fiber optic technology stocks and memory makers — all cornerstones of the AI trade — were having a pretty good day, suggesting the market sees the wave of AI construction continuing, war or no war.

Optical stocks seen as crucial to efficiently transmitting the flood of information AI data centers both produce and depend on were surging. Corning, Lumentum, Coherent, and Ciena Corp. ramped.

Server rack makers HP Enterprise and Dell jumped. Construction and engineering companies like Sterling Infrastructure, MasTec and Comfort Systems USA, which have benefited from the growth in building data centers, posted solid gains.

Hard disk drive makers Seagate Technology Holdings and Western Digital were also positive, though other memory plays such as Sandisk and Micron were in the red.

It was an impressive display of positivity on a day when the S&P 500 (SPDR S&P 500 ETF) and the Nasdaq 100 (Invesco QQQ Trust) were both fluttering between positive and negative territory for completely understandable reasons.

After all, the 82nd Airborne is heading to the Mideast, suggesting the US is considering sending troops into Iran. US crude oil is back above $90 a barrel and climbing, as the Strait of Hormuz remains essentially shut.

Additionally, the problems in the private credit market continue with major fund managers preventing investors from withdrawing all the money they would like to. We even had a weak auction for US two-year Treasury notes — investors seemed to think the offered yield might not be sufficient to offset inflation risks set off by the war — that sent short-term interest rates up sharply.

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The S&P 500 briefly turned green following the report, before paring some of those gains in the afternoon.

From the CNN report:

“An Iranian source told CNN on Tuesday that there had been ‘outreach’ between the United States and Tehran and that Iran is willing to listen to ‘sustainable’ proposals to end the war.

‘There has been outreach between the United States and Iran, initiated by Washington, in recent days, but nothing that has reached the level of full-on negotiations,’ the source said. ‘Messages have been received through various intermediaries to scope out whether an agreement to end the war can be reached.’”

Markets had zoomed Monday as President Trump said there had been discussions between the two nations, but they gave back some of their gains after Iran starkly denied the claim. Markets seemed to read this new reporting as a softening of Iran’s position.

Iranian source says there has been US "outreach" and Tehran "willing to listen"

“An Iranian source told CNN on Tuesday that there had been ‘outreach’ between the United States and Tehran and that Iran is willing to listen to ‘sustainable’ proposals to end the war.

‘There has been outreach between the United States and Iran, initiated by Washington, in recent days, but nothing that has reached the level of full-on negotiations,’ the source said. ‘Messages have been received through various intermediaries to scope out whether an agreement to end the war can be reached.’”

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Analysts react to Palantir’s Q2: “Execution has been stunning”

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