The Upgrade and the Math Behind It
Palantir just moved to a buy rating from neutral, with a price target of 175, raised from 165. The reasoning rests on a few catalysts: profits are climbing fast, and the valuation is the most attractive it has been in a long time.
My view is that Palantir may be the best company in the world, and at the very least the best software company. The hesitation to recommend it came down to price. A year ago the stock traded at 200 times cash flow, which is a level that leaves no room for error. Since then, attention has drifted elsewhere, and a company that is doubling its cash flow this year has watched its stock fall by roughly a third. That drop resets the picture. It now trades at 50 times cash flow. Still high, but that puts it in the same neighborhood as other fast-growing software names like Snowflake, Datadog, CrowdStrike, and Shopify, all trading at a similar multiple. The difference is that Palantir is growing twice as fast as those companies.
That conclusion did not come from a spreadsheet alone. It came from a lot of work talking to Palantir's customers, its partners, and time spent with the company itself. The takeaway was that the recent run of success should continue. Palantir is delivering real value by putting AI capabilities to work for customers, and those customers are referring new customers. There is heavy inbound interest in Palantir's projects and products, and the company is deploying those solutions well. This is a great American company that does a lot to keep the country safe, which makes the timing around the 250th birthday feel like a gift.
Can the Growth Rate Hold
The 2026 and 2027 estimates have been revised higher, which raises the obvious question of whether growth at twice the pace of peers can last. Alex Karp has said the company can deliver something like a 50 to 70 percent recurring growth rate for the next three years. Palantir is being built to sustain exactly that kind of growth, and given the interest in its products and the direction AI is heading, it sits in a strong position to hit those numbers.
Earlier in the year there was a wave of doubt, a sense that Anthropic and OpenAI could simply do all of this themselves. Then a couple of things shifted the thinking. The reality is that a company needs a partner like Palantir, one that walks into an organization and builds a solution capable of running on top of any model. Consider what happens if you build your business directly on top of a single Anthropic model. A few weeks ago the government pulled the plug on one such model, and the company then pulled it from the market. Any business that had built its solution straight onto that model would have been left exposed. Companies have absorbed that lesson. They now want someone like Palantir to build the solution, so that if something like that happens again, they can swap in an OpenAI model or even an open-source model. The open-source route can be better still, since it tends to be more efficient. Palantir's role in this market has been important, and it is becoming more important. The government's restrictions on Anthropic amount to more validation for a name like Palantir.
Why Deployment Is the Real Moat
Everyone is trying to figure out how to use AI, and most companies are at the earliest stages, throwing things at the wall to see what catches. Palantir's customers are already past that. They are using AI to deliver results. When they bring Palantir in, they can identify the impact AI can have on the business, implement the right tool to get there, and then keep it running. That work is beyond what most traditional packaged software companies can offer, because they lack the professional services muscle to do it.
The forward-deployed engineers are the secret. They go into a company, figure out what the business actually needs AI to do, implement it, and then help maintain it. Those capabilities are genuinely specific to Palantir, and they are hard to copy.
The IPO Wave and Where the Money Comes From
The prospect of large IPOs raises a question about money flows. We have already seen SpaceX come to market, and the broader IPO pipeline is active. If OpenAI or Anthropic go public, the effect on the market would be substantial, because those companies would raise enormous amounts of capital at very high valuations, and that capital has to come from somewhere.
Palantir is probably the last place it comes from. The money is more likely to be pulled out of the rest of tech, out of the semiconductor trade, and out of all the other channels investors have used to get exposure to AI growth. OpenAI and Anthropic would be pure plays on AI, so they should attract a lot of interest, especially if they keep making the progress they have been making. Both are growing at an unprecedented rate at an unprecedented size. They will take a lot of oxygen out of the room when they go public. That dynamic actually helps Palantir, because a great deal of those resources will flow toward deploying Palantir solutions.
Volatility, Indices, and the Bull Case
Tech is back, and Palantir carries what I would call main character energy inside that comeback. The year has had its share of ups and downs for the sector, and more volatility is coming. Every fresh data point about AI forces people to rethink the length of the cycle: how many more data centers get built, whether we will need that many semiconductors, whether we will need that much memory. Palantir gets caught in those swings whether it deserves to or not, because it sits in the indices as a meaningful component of both the Nasdaq and the software index. Movements in those benchmarks show up in its share price.
Underneath the noise, the business is winning. Customers love the company, and it helps those customers win, which feeds on itself. Palantir does not need to lean on a heavy outbound sales motion. It fields inbound calls and gets to be selective about which customers to take on. Winning begets winning, and that is what is happening now.
The stock has come down from 207, and the target sits at 175. Stretch the frame out to a three-year chart and the contrast is striking: three years ago the stock was at $13. The bull case is straightforward in its logic. The company is talking about growing its customer base two to three times over the next three years. If it is still doing that three years from now and the multiple holds where it is, that expansion is how much the stock rises.
