By Emily Bary
Many analysts note that Palantir’s stock is expensive, but that hasn’t stopped the S&P 500’s top performer from adding to its huge gains
Analysts continue to voice concerns about Palantir’s valuation in the aftermath of the software company’s blowout earnings report. But those who heeded those warnings dating back to last year would have missed out on huge stock gains.
Palantir (PLTR) has bucked the skeptics, posting its eighth quarter in a row of accelerating revenue growth on Monday and predicting that the current quarter would mark the ninth. Meanwhile, its stock is up 8.5% in Tuesday morning trading to extend its position as the S&P 500’s top gainer of the year, up more than 130% over that span.
While Wall Street analysts worry about the stock’s eye-popping valuation, that’s not a new concern – nor is it one that’s mattered for the stock lately. Analysts said Palantir shares were expensive last year as well, but the shares closed out 2024 up about 340%. Palantir’s stock was the top performer in the S&P 500 last year, according to Dow Jones Market Data, though it didn’t join the index until September 2024.
Read: Palantir’s stock gains as ‘bombastic’ AI demand fuels an earnings milestone
The company’s market capitalization is on track to exceed $400 billion for the first time on Tuesday, which would place it 19th in the S&P 500 if current gains hold, according to Dow Jones Market Data. Wedbush’s Daniel Ives, the biggest bull on Palantir’s stock thanks to his $200 target price, predicts bigger things ahead for the software giant – namely a $1 trillion valuation within a few years.
The bull camp among sell-side analysts is still small. After a roughly 340% rally in 2024, just three analysts had buy ratings on Palantir’s stock to end the year, compared with 12 who had neutral ratings and seven who had sell ratings. Now the “buy” camp has grown to include eight of the 29 analysts who currently cover the stock, according to FactSet data, though that includes some who haven’t updated their models recently. In any case, neutral-rated analysts make up the majority, at 17. Four analysts are outright bearish.
For bulls, the latest earnings are a validation moment. Bank of America’s Mariana Perez Mora wrote that U.S. customer count was up 64%, “soothing concerns that growth is capped by the number of forward deployed engineers” that Palantir can maintain.
But those who’ve held off on recommending the stock are still worried about the valuation, even as some acknowledged positives in the latest numbers.
For instance, D.A. Davidson’s Gil Luria noted the software company’s “parabolic” growth and “significantly improved outlook” that topped the consensus view easily. “We believe Palantir is the best story in all of software,” Luria wrote
Luria isn’t telling investors to buy the stock. It trades at about 103 times revenue expectations for this year, he added, an “unprecedented premium to any peer,” and “the only reason” he’s sticking with his neutral rating.
Mizuho’s Gregg Moskowitz also discussed the stock’s “extreme” multiple, which he said was “dramatically above anything else in software.” But he took a mixed view of the current situation as he stuck with his neutral stance.
“While we continue to worry that the shares could suddenly be subject to material multiple reversion at some point over the next few quarters, [Palantir’s] uniqueness demands substantial credit,” he wrote. “We believe [Palantir] is increasingly well-positioned to benefit from long-term trends in AI, government digital transformation, and industrial modernization.”
Brent Thill of Jefferies took a harsher view on the valuation, saying that it’s “disconnected from even optimistic growth scenarios” with Palantir shares trading at 74 times estimated 2026 revenue. A 55% compound annual growth rate over four years would require the stock to trade at 25 times estimated 2028 revenue to warrant its current price, he wrote.
Chief Executive Alex Karp colorfully alluded to some pockets of skepticism about Palantir in his shareholder letter, while vowing to forge ahead.
“The growth rate of our business has accelerated radically, after years of investment on our part and derision by some,” he wrote. “The skeptics are admittedly fewer now, having been defanged and bent into a kind of submission. Yet we see no reason to pause, to relent, here.”
-Emily Bary
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08-05-25 1007ET
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