Palantir (PLTR) Stock: Why Analysts See 42% Upside After Recent Drop

TLDR

• Citi analyst sets $235 price target on Palantir, forecasting 70-80% revenue growth in 2026
• U.S. commercial segment revenue surged 121% in Q3 as AI platform gains enterprise traction
• PhillipCapital initiates buy rating at $208, arguing stock undervalued versus historical averages
• Company backlog of $2.6 billion up 65% provides visibility into future revenue
• Stock trades at 170x forward P/E, down from 309x peak in October

Palantir Technologies shares dropped 17% in three months. Now two analysts say the decline created opportunity.

Palantir Technologies Inc., PLTR

Tyler Radke at Citi raised his price target to $235. That implies 42% upside from Tuesday’s close.

Radke thinks standard valuation models don’t apply to Palantir anymore. The company is growing too fast while improving margins.

He expects government revenue to jump 51% this year. Defense budgets are expanding and agencies need IT modernization.

Total revenue could grow 70-80% in 2026, Radke predicts. The Artificial Intelligence Platform is driving demand across sectors.

Commercial Business Powers Growth

Third quarter results show the momentum. Revenue climbed 63% year-over-year to $725.5 million.

The U.S. commercial segment led the way. Sales jumped 121% compared to last year and 29% from the prior quarter.

This business now accounts for 34% of total revenue. AIP adoption is accelerating among enterprise customers.

Government agencies are starting to use the platform too. They saw commercial success and want similar results.

Remaining performance obligations reached $2.6 billion, up 65%. These contracted sales will convert to revenue over time.

Management raised guidance for the year. They expect revenue of $4.4 billion, representing 53% growth.

U.S. commercial should hit $1.43 billion for 104% expansion. The business is outpacing earlier projections.

Valuation Looks Better

Paul Chew at PhillipCapital started coverage with a buy rating. His $208 target suggests 32% upside.

Chew compares Palantir to its own history rather than peers. By this measure, the stock looks cheaper.

Forward P/E dropped from 309x in October to 170x today. That’s below the one-year average of 190x.

The AI selloff pushed valuations down across the sector. Palantir got caught in the broader decline.

Chew notes the company has captured just 2.4% of its $119 billion addressable market. The AI software space is growing over 25% annually.

He projects $4.2 billion in 2025 revenue for 47% growth. Net profit should nearly double this year.

Commercial revenue will grow faster than government. The segments should increase 51% and 43% respectively.

Palantir expanded from 60 industry sectors in 2021 to 90 in 2024. Each new vertical adds revenue potential.

The company posted a Rule of 40 score of 114% in Q3. This metric combines growth rate and profit margin.

Most analysts remain neutral on the stock. Consensus shows six buys, ten holds, and two sells.

The average price target is $189.94 for 21% upside. Both Radke and Chew sit well above this level.

Palantir has gained 2,190% over three years. The stock experienced at least ten drawdowns of 20% or more during that period.

Both analysts think the latest pullback doesn’t reflect the business fundamentals. Growth is accelerating while margins expand.

The defense spending cycle and AI adoption could drive shares higher. Management keeps raising guidance as demand exceeds expectations.

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