Several analysts immediately raised their target prices on shares of military and civilian AI developer Palantir after a strong quarterly report. Palantir reported that its revenue rose 48% to exceed $1 billion for the first time and improved its full-year outlook, citing surging demand for AI. 

Nevertheless, despite the results better than Wall Street expected, experts expressed doubts about the sustainability of such revenue growth in the future. In addition, they are also wary of the overvaluation of Palantir shares: since the beginning of the year, the company's securities have already risen by more than 130%, and Wall Street believes that further growth potential may be limited.

Details

- Following the Palantir report, Wedbush analyst Dan Ives raised his target price on the company's stock from $160 to $200, one of the highest estimates on Wall Street. Ives' new target implies the company's market value will rise another quarter from its Aug. 4 close. The analyst also reiterated an Outperform rating ("above market," equivalent to a "buy"). In a note available to Oninvest, Ives called Palantir "the Messi of the AI world," noting that the company again beat expectations across all key metrics and raised its 2025 outlook. The acceleration in the commercial business in the U.S. was particularly striking, with revenue up 93% year-over-year and contract value up 222%. This, Ives said, demonstrates the success of the land and expand (land and expand) strategy. Wedbush also highlighted Palantir's continued strength in the defense sector and expressed confidence in the sustainability of continued revenue growth amid the AI boom. Ives concluded by noting that Palantir remains one of his top technology favorites for investment in 2025.

- UBS analyst Karl Kersted raised his target price by $55 to $165, but maintained a neutral rating (equivalent to a "hold"), reports CNBC. UBS's new target implies a potential upside of just 2.7% from the close of previous trading. "Palantir is fortunate to be at the intersection of several megatrends at once, from the development of AI applications and investments in data processing to the modernization of defense technology. But the 136 annualized free-flow estimate for 2026 remains a major constraint for us, so we maintain a neutral rating," Kersted said. He said the company's business looks stable and the securities are likely to continue trading in the upper range of the all-time high.

- Citi analyst Tyler Radke also maintained a neutral rating for Palantir's shares, but raised their target price from $158 to $177. Radke called the second quarter "truly exceptional" for Palantir, but opted to remain cautious due to the high valuation of the company's securities, CNBC noted. "We were already positive, but the magnitude of the outperformance, especially in bookings, was beyond even our wildest forecasts - and stands out markedly from the rest of the software sector. We expect the stock to hold gains post-report thanks to such brilliant results," the Citi analyst wrote (quoted by CNBC).

- Morgan Stanley analyst Sanjit Singh maintained an Equal weight rating (on par with the market) but raised his target price to $155 from $98. His new target is 3.5% below the last closing price. Singh believes Palantir is "winning the current AI cycle." "Wow... is our reaction to our second quarter results: virtually all key metrics and indicators accelerated compared to a strong first quarter," Singh emphasized in a note cited by CNBC. He said Palantir has now posted eight consecutive quarters of accelerating year-over-year revenue growth - and that makes sense against the backdrop of how generative AI is capturing the attention of both the tech industry and society at large.

- Deutsche Bank raised its rating on Palantir shares from "sell" to "hold" and raised its target price by $80 to $160. The bank believes that Ontology, a core component of Palantir's software platform, is the company's key competitive advantage due to its high-quality customer base, large contracts and business scale in terms of both revenue growth and margins. However, a Deutsche Bank analyst expressed concerns about the company's stock being overvalued. "Admittedly, we realized rather late how Palantir's platform uniquely fits into the AI trend and how this has radically changed the trajectory of the company. We've been factoring in this progress for several quarters now, but we still have a hard time accepting this valuation - it's still many times higher than all of [Palantir's] publicly traded software competitors," said Deutsche Bank analyst Brad Zelnick.

- Jefferies analyst Brent Till maintained an Underperform rating equivalent to a "sell" advice, with a $60 target price - down about 62% from the last close. Till recognizes that the company is showing "explosive growth in fundamentals," but believes the current stock valuation is "detached" from even the most bullish scenarios. In Till's view, even if Palantir's revenue grows very fast - at 55% per year for four years - the current stock price still looks overvalued. For it to be justified, by 2028 the company would have to be trading at a three times lower multiple than it is now. In addition, he sees Palantir's promotional strategy as risky: the company relies on a service-based model and has barely developed its own sales team, which could hinder scaling and reduce business efficiency.

In trading on August 5, Palantir shares soared nearly 10% to $176.3, hitting an all-time high. With that, the company's market value is now up 130% since the beginning of the year. Still, Wall Street's most popularrecommendation remains the advice to keep previously purchased stocks in the portfolio (16 Hold ratings out of 29). Only eight analysts recommend Buy (Buy and Overweight) and the remaining five recommend Sell (Underweight and Sell). The Wall Street consensus target price on Palantir securities is now $130.5 - 19% below the last closing price on August 4.

This article was AI-translated and verified by a human editor

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