Palantir trades at 61 times guided 2026 revenue and 98 times forward earnings. As growth moderates toward 45% in 2027, multiple compression will drive shares toward our $148.00 target. We rate the stock Strong Sell.
Key points
- $198.77 trades at 61 times guided 2026 sales and 98 times our forward earnings estimate.
- 93% revenue growth in Q2 reflects stellar execution, but comparisons steepen sharply.
- $148.00 target reflects multiple normalization to 73 times FY2027 earnings.
The call
The market price requires Palantir to maintain hypergrowth above 50% through 2028 while expanding operating margins past 55% without multiple compression. At 61 times 2026 revenue and 98 times forward earnings, the market is too optimistic about long-term software multiples. No enterprise software company has sustained such multiples at half a trillion dollars of equity value.
Annual Revenue Trajectory and Analyst Forecast ($ billions)- Reported Revenue ($B)
- Analyst Revenue Forecast ($B)
Historical SEC filings and analyst forecasts for FY2026E and FY2027E.
We believe growth will decelerate toward 45% in 2027 as difficult base comparisons take hold. While Palantir's ontology software and AI deployment platform command rare pricing power, government procurement cycles and cloud infrastructure costs will limit further operating margin expansion. A disciplined valuation framework indicates substantial downside as multiples normalize toward peer frontier software levels.
12-Month Price Target Sensitivity by Multiple ($)Valuation sensitivity across FY2027 GAAP P/E multiples at $2.03 EPS.
Valuation
| Metric | Estimate |
|---|
| FY2026 guided revenue | $8.15 billion |
| FY2027 estimated revenue | $11.80 billion |
| FY2027 estimated GAAP net income | $5.25 billion |
| FY2027 estimated diluted shares | 2.585 billion |
| FY2027 estimated GAAP EPS | $2.03 |
| Target price-to-earnings multiple | 73× |
| 12-month price target | $148.00 |
Our $148.00 target applies a 73 times multiple to our FY2027 GAAP earnings estimate of $2.03 per share, representing a 26% decline from today's price. This multiple grants Palantir an unprecedented premium over mega-cap enterprise software peers to reflect its sovereign AI positioning. Given the severe negative asymmetry between valuation risk and growth expectations, we rate the shares Strong Sell.
Risks
- U.S. commercial acceleration: Commercial deal sizes could expand faster than forecast, visible in net dollar retention exceeding 165%.
- Defense budget surges: Federal sovereign AI mandates could drive outsized procurement, visible in USAspending prime award contract obligational spikes.
- Margin expansion: Rapid AI deployment efficiencies could reduce delivery costs, visible in GAAP gross margins expanding past 88%.
What would change my mind
We would change our view if remaining performance obligations grow above 70% sequentially alongside sustained commercial customer additions.