Citi upgrades Palantir to “buy,” citing recent conversations with CIOs

Citi analysts hit the buy button on Palantir Technologies Monday, citing a strong outlook for growth both in Palantir’s large government contracting and defense business as well as its rapidly growing commercial division, which sells software to corporations to help them better use AI technology.

“Our upgrade is premised on our view that 2026 is poised to be another year of significant positive estimate revisions, with recent CIO [chief information officer] + industry conversations suggesting AI budget and use cases are accelerating in the enterprise. We also see significant tailwinds in the Government driven by accelerating defense budgets and modernization urgency.”

The bank, which had a “neutral” rating on the stock since February 2024, also cited chatter at its recent IT software conference, where participants talked up the cost savings generated by Palantir’s AI Platform software and noted that its Q4 IT survey on software budgets showed an incremental rise in budgets “especially for dedicated AI workloads and data project prioritization.”

“We expect PLTR, with its Foundry and AIP platform, to be one of the key Data Analytics/ AI vendors that could see further tailwind into numbers,” Citi analysts wrote.

Palantir is expected to report Q4 results on February 18.

But it’s an open question whether the surging growth Citi now sees for the company has already been priced in for the stock. The shares have risen close to 1,000% over the last two years, pushing standard measures of valuation to arguably lunatic levels.