Analyst sends surprising message on Palantir stock in 2026

Core Insights - Palantir Technologies has experienced significant stock fluctuations, with a recent decline of over 2% in the past month, despite a remarkable increase of 135% in 2025 and 340% in 2024, driven by high demand for its AI software and record revenue growth [1][2] Financial Performance - The company reported $1.18 billion in revenue for the third quarter, marking a 63% increase year-over-year, with U.S. commercial sales surging 121% to $397 million [5] - Adjusted earnings per share were 21 cents, surpassing analysts' expectations of 17 cents [5] - Palantir's stock has soared nearly 3,000% over the past three years, although concerns about its valuation persist [2] Market Demand and Clientele - A significant portion of Palantir's revenue, over 50%, comes from U.S. government contracts, particularly military agencies [3] - The company secured a deal worth up to $10 billion with the U.S. Army in July 2025, highlighting its strong government sector presence [3] - Commercial clients include notable companies such as Airbus, Morgan Stanley, and Merck KGaA, indicating a diverse client base [3][4] Analyst Perspectives - Citi upgraded Palantir's stock from neutral to buy, raising the price target from $210 to $235, citing expectations for significant positive estimate revisions in 2026 [7] - Analysts believe that Palantir's growth acceleration and margin expansion have challenged traditional valuation metrics [8] Future Outlook - Palantir is set to report its fourth-quarter earnings in early February, with high market expectations following a series of strong results [6] - The stock currently trades at approximately 245 times its forward earnings multiple, raising questions about whether future results will justify this valuation [6]