Analysts react to Palantir’s Q2: “Execution has been stunning”
But they’re still uncomfortable with the valuation.
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.”
