Palantir Technologies is facing earnings challenges following recent weakness. Palantir’s stock price has fallen 25% in the past three months as software stocks have fallen sharply. Software stocks have been among the S&P 500’s worst performers this year due to concerns about the disruption of artificial intelligence. One popular technical indicator showed that Palantir was one of the most oversold stocks on the market last week. But despite this, Palantir still leads by 81% over the past year. Wall Street is currently gearing up for Palantir’s fourth-quarter results, which will be released after the market closes on Monday. Analysts covering Palantir expect the company to report revenue of $1.329 billion and earnings of 23 cents per share in the December quarter, according to LSEG. The company in November beat expectations for the third quarter, reporting adjusted earnings of 21 cents per share on revenue of $1.18 billion. Government sales, particularly from high-profile military contracts, have been critical to Palantir’s growth in recent quarters. The company’s U.S. commercial business also soared, more than doubling sequentially as it solidified new partnerships with Nvidia, Snowflake and others. Some analysts see the stock as a buying opportunity following recent stock declines, and see global geopolitical conflicts and the large U.S. defense budget as the main catalysts for Palantir’s future government and commercial revenues. For example, Trust Securities analyst Arvind Ramnani pointed to Palantir’s free cash flow margin of more than 40%, which means CEO Alex Karp’s company can increase its return on capital over time. PLTR 5Y Mountain Palantir Technologies’ stock price performance over the past five years. Still, opinions on the street are mixed. A survey of 27 analysts covering the stock by LSEG found that only three rated it a “buy” and five rated it a “buy.” 16 analysts have maintained a hold rating on the stock, while 2 have an underperform rating and 1 has a sell rating. The consensus price target suggests 26% upside potential, according to LSEG. Palantir’s rapid growth has also raised concerns about the stock’s high valuation compared to tech giants with much higher profits. See what top companies are saying about Palantir ahead of its earnings: William Blair: Outperform rating, $200 price target Analyst Louis DiPalma upgraded Palantir to outperform the market in a note to clients on Monday. William Blair’s proprietary government and commercial tracking information shows the company’s continued momentum, he said. “The new administration remains committed to Palantir, and companies are adding workflows, which contributed to Rule 114’s incredible September quarter and perhaps a very strong December quarter. Palantir’s valuation, while still frothy, looks more reasonable when compared to recent venture rounds for companies related to the AI ecosystem,” DiPalma wrote. “In our view, the recent decline in stock prices creates a buying opportunity for Palantir as an AI supply chain leader.” Citigroup: Buy, $235 Citi analyst Tyler Radke believes Palantir’s commercial business will expand significantly this year. The company’s use of agent AI and “new urgency for global defense are very much in line with PLTR’s strengths in data ontology and forward deployment engineering,” he wrote in a note to clients on Jan. 12, raising his rating on the stock from neutral and raising his price target by $25 to $235. “Our upgrade is premised on our view that 2026 will be another year of significantly positive forecast revisions. Recent CIO and industry conversations suggest that AI budgets and use cases in the enterprise are accelerating. We also believe there are significant tailwinds in government with accelerating defense budgets and the urgency of modernization,” Radke said. RBC Capital Markets: Underperform, $50 RBC is one of the most bearish companies on Palantir. Analyst Rishi Jallia said his research into the strength of Palantir’s commercial business suggests that corporate customers continue to defect. RBC’s proprietary government tracker suggests Palantir’s fourth-quarter government growth rate was below consensus year over year, he said. “We are looking for evidence of an upturn in the commercial sector (improvement in (net retention) or signs of meaningful monetization from (artificial intelligence platforms)). We remain cautious about commercial sector growth given the high level of competition,” Jallia said in a Jan. 26 note. “We cannot justify why Palantir is the most expensive company in our software coverage. Without a substantial beat-and-raise quarter to boost the Northern Territory’s growth trajectory, the valuation appears unsustainable.” Trust Securities: Buy, $223 Analyst Arvind Ramnani bought Palantir’s research coverage in January and started with a price target of $223. In a Jan. 6 memo to clients, he wrote that the company has an “unparalleled financial profile” and remains well-positioned to benefit from increased adoption of AI in both government and private enterprise. “While we acknowledge PLTR’s significant valuation premium command, we continue to view it as a buy given the significant opportunity for governments and businesses to accelerate GenAI adoption,” he said. “PLTR has seen a significant improvement in momentum with the release of AIP, with revenue growth accelerating from 13% to 63% year over year as of Q2 2023, with the majority of this growth flowing into operating margins, with margins reaching over 50%. While much of the momentum is coming from our U.S. operations, we see our international operations as a significant opportunity.”
