Palantir Stock Gets a Price Target Hike. How Far It Can Go Ahead of Earnings.

Palantir CEO Alex Karp. (Ludovic Marin/AFP via Getty Images)

Palantir Technologies has nearly doubled in value this year, with shares hitting a record high earlier this week. While it may seem inevitable that growth will stall, some analysts see no end in sight to the good times.

Mizuho analysts led by Gregg Motskowitz upgraded shares of the artificial-intelligence software company to Neutral from Underperform and boosted their price target to $135 from $116 in a note Wednesday.

The Mizuho team believes Palantir “has a legitimate change to accelerate revenue growth for a fifth consecutive quarter” when reporting second-quarter results next month.

But the analysts would be remiss not to mention Palantir’s lofty valuation. “We were stunned by the multiple that PLTR has attained, which places its valuation dramatically above anything else in software,” the team conceded.

Based on Mizuho’s estimates, Palantir trades at an enterprise-value-to-sales multiple of 97 times 2025 earnings and 77 times 2026 earnings. This leads to a very real concern that shares could suddenly be subject to multiple reversion at some point over the next few quarters. Moreover, the high cost of the company’s AI solutions “likely materially limits its addressable customer base,” the firm wrote.

However, “PLTR’s uniqueness demands a great deal of credit,” analysts contended. Looking forward, they remain bullish on Palantir’s public sector pipeline, “which appears durable given ongoing geopolitical instability.”

While Palantir’s government business accounts for a sizable chunk of revenue, commercial business in the U.S. is also growing rapidly, fueled by the adoption of Palantir’s flagship AI Platform as well as “growing urgency around internal data integration.”

And there are more developments to come. “While Warp Speed remains too early to impact estimates, we are very encouraged by its potential,” the analysts wrote, referring to the manufacturing operating system that launched in 2024. The company announced “Warp Speed for Warships,” a program to accelerate shipbuilding modernization within the U.S. Navy, earlier this month.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com