Palantir Stock Investors Just Got Good News From Wall Street Analysts

Palantir Technologies (NASDAQ: PLTR) shares have advanced 2,000% since January 2023, recording triple-digit returns in each of the last three years. But the stock has trended lower in 2026. It currently trades 34% below its record high despite the company reporting strong financial results in early February.

However, Wall Street analysts covering Palantir generally think the stock is oversold. In fact, the median target price of $196 per share implies 43% upside from the current share price of $137. Moreover, several analysts have increased their forward earnings estimates substantially in the last month, reflecting greater conviction in the company.

Here's the good news for Palantir shareholders.

Image source: Getty Images.

Palantir is a recognized leader in AI decisioning platforms

Palantir develops data integration and analytics software for commercial and government customers. It also builds an adjacent artificial intelligence (AI) platform that lets developers integrate large language models into applications and workflows. Palantir's platforms revolve around a decision-making framework called an ontology, which differentiates its products from most analytics platforms.

Last year, Forrester Research recognized Palantir as a leader in AI decisioning software, which automates and improves the decision-making process. Similarly, the International Data Corp. ranked the company as a leader in AI-enabled source-to-pay software, which is used to optimize decision-making related to procurement and supply chain management.

Mariana Perez Mora at Bank of America recently set Palantir with a target price of $255 per share, implying 86% upside from its current share price of $137. "We continue to see PLTR unmatched in their ability to rapidly achieve in-production solutions and provide human-machine teams with the ability to make the most informed decisions," she wrote.

Going forward, Palantir has a powerful tailwind at its back. Grand View Research estimates the AI platforms market will expand at 38% annually through 2033.

Palantir's revenue growth has accelerated in 10 straight quarters

Palantir reported exceptional financial results in the fourth quarter. Revenue increased 70% to $1.4 billion, the 10th straight acceleration, and non-GAAP net income increased 79% to $0.25 per diluted share. The company achieved an unprecedented and particularly impressive Rule of 40 score of 127%.

Following the report, Sanjit Singh at Morgan Stanley set Palantir with a target price of $205 per share, which implies 50% upside from its current share price of $137. In a note to clients, Singh said the company was becoming the standard in enterprise AI as it delivers the best growth and profitability across public software companies. "It's hard to find a better fundamental story in software."

Wall Street analysts have raised their forward earnings estimates

Several Wall Street analysts have increased their forward earnings estimates since Palantir released its fourth-quarter report. The new consensus estimates are listed below, along with details about how the consensus estimates have changed in the last month.

• 2026: $1.31 per diluted share (up 30% in the last month)
• 2027: $1.83 per diluted share (up 31% in the last month)

That is good news for shareholders. Stocks are often valued based on how quickly investors think earnings will increase in the future, so upward revisions to forward earnings estimates can lead directly to share price appreciation.

However, Palantir shareholders still have something to worry about. Including the upward revisions, Wall Street expects adjusted earnings to increase at 56% annually through 2027. That makes the current valuation of 183 times adjusted earnings look very expensive.

Here is the big picture: The Palantir brand is synonymous with enterprise AI, and its financial results have been nothing short of spectacular. But not even the best company in the world is worth buying at any price. Palantir trades at an extraordinarily rich valuation, which means the risk-reward profile is heavily skewed toward risk.

Bank of America is an advertising partner of Motley Fool Money. Trevor Jennewine has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.