Company Reports

We are raising our fair value estimate for narrow-moat Palantir to $16 from $15 as we incorporate the financial impact of the firm winning the 24-month, $178 million U.S. Army Titan, or Tactical Intelligence Targeting Access Node, contract. Along with the near-term uplift as the contract value flows through Palantir’s financials, we also see this contract award as a potential long-term value driver for the business. First, we believe Palantir’s success in landing the Titan contract could enable the firm to improve its software capabilities, leading to better bids for future large contracts. Second, while not set in stone, we see the US Army possibly extending the TITAN contract beyond its initial 24-month phase. If Palantir executes well over the next couple of years, the firm could potentially bag additional mandates as the Army builds out TITAN further.

We believe Palantir is well placed for long-term success as a leader in artificial intelligence/machine learning platforms. Its two main platforms, Gotham and Foundry, are well suited to help governments and commercial clients harness the power of data. Palantir’s platforms stand to materially benefit as organizations seek to expand their use of data to inform business decisions. We expect this secular tailwind to allow the company to land more clients while also expanding revenue from existing ones.

We believe Palantir is well placed for long-term success as a leader in artificial intelligence/machine learning platforms. Its two main platforms, Gotham and Foundry, are well suited to help governments and commercial clients harness the power of data. Palantir’s platforms stand to materially benefit as organizations seek to expand their use of data to inform business decisions. We expect this secular tailwind to allow the company to land more clients while also expanding revenue from existing ones.

We are raising our fair value estimate for narrow-moat Palantir to $15 from $13 after the firm reported another strong quarter, with impressive sales growth matched by an increasingly attractive margin profile. Palantir’s AI platform, or AIP, continued to provide an uplift to the firm’s commercial sales as customer interest in Palantir’s AI solutions remained robust. We remain optimistic about Palantir’s growth opportunities in the AI space and expect robust sales expansion on the back of its AI solutions as more organizations adopt AI. Despite our bullish, above-consensus growth and profitability assumptions, we are unable to rationalize Palantir’s current valuation. With shares up double-digits after the earnings report, we continue to view them as overvalued relative to our updated fair value estimate.

We believe Palantir is well placed for long-term success as a leader in artificial intelligence/machine learning platforms. Its two main platforms, Gotham and Foundry, are well suited to help governments and commercial clients harness the power of data. Palantir’s platforms stand to materially benefit as organizations seek to expand their use of data to inform business decisions. We expect this secular tailwind to allow the company to land more clients while also expanding revenue from existing ones.

We are raising our fair value estimate for narrow-moat Palantir to $13 from $11 after the firm reported a strong quarter with profitability well ahead of our prior estimates. Commercial deals and sales led the way as interest in Palantir’s AI solutions continues to provide an uplift to the firm. As more customer dollars are dedicated to spending on AI, we believe Palantir, a leader in the AI platform space, stands to benefit. As a result, we are optimistic about Palantir’s opportunities going forward, especially as AI-related spending is only projected to grow. At the same time, however, we remain unable to rationalize Palantir’s market valuation. With shares up sharply after the earnings report, we continue to view them as overvalued even after our fair value increase.

We believe Palantir is well-placed for long-term financial success as a leader in the artificial intelligence/machine learning, or AI/ML, platforms space. Palantir’s two main platforms, Gotham and Foundry, are well-suited to help governments and commercial clients harness the power of data. Palantir’s platforms stand to materially benefit as organizations seek to expand their use of data to inform business decisions. We expect this secular tailwind to allow Palantir to land more clients while also expanding revenue from existing ones.

We are raising our fair value estimate for narrow-moat Palantir to $11 from $9 after the firm reported a strong quarter with improved profitability and particularly strong billings expansion. As we have highlighted previously, we are optimistic about Palantir’s opportunity in both government and commercial markets. We believe the firm’s expertise in artificial intelligence, coupled with its formidable product lineup makes it a leader in the AI platform space. At the same time, however, despite our estimates being well above consensus for the next three years, we remain unable to rationalize Palantir’s current market valuation. With shares trading around $18 per share, we view them as overvalued and would advise investors to tread with caution as we do not believe the firm’s valuation is backed by strong fundamentals.

We believe Palantir is well-placed for long-term financial success as a leader in the artificial intelligence/machine learning, or AI/ML, platforms space. Palantir’s two main platforms, Gotham and Foundry, are well-suited to help governments and commercial clients harness the power of data. Palantir’s platforms stand to materially benefit as organizations seek to expand their use of data to inform business decisions. We expect this secular tailwind to allow Palantir to land more clients while also expanding revenue from existing ones.

Over the past few weeks, narrow-moat Palantir’s shares have skyrocketed to more than $16 per share, up from just under $8 in early May. The rise, catalyzed by strong first-quarter results, has left Palantir trading significantly higher than our $9 fair value estimate. We believe investors should tread with caution as we believe that the dramatic uptick in Palantir’s share price is not currently backed by a similar rising strength in the firm’s fundamentals. While we maintain a positive outlook on Palantir’s business, future growth opportunities, and increasing target addressable market, we believe the firm’s shares are currently overvalued.

We are maintaining our $9 fair value estimate for Palantir after the firm reported a strong quarter, including strong top-line growth, robust billings, and GAAP profitability. We continue to have a positive outlook on Palantir’s set of government/commercial solutions and envision an improved business environment as macro pressures dissipate over time. We believe a renewed interest in artificial intelligence also bodes well for Palantir’s solutions, which have long leveraged AI to deliver business outcomes for clients. With shares up more than 20% after hours, we believe the market has calibrated its valuation to reflect Palantir’s strong fundamentals that we have previously highlighted, and we view the firm’s shares as fairly valued.

We are raising our fair value estimate for Palantir to $9 from $8 as we account for the time value of money following our model roll. The firm fourth-quarter financial results came largely in line with our prior estimates and the firm’s guidance for fiscal 2023 was marginally below our prior forecasts. We continue to have a positive outlook on Palantir’s ability to expand sales from both governmental and commercial clients. We also believe that Palantir’s platforms stand to benefit as firms increasingly leverage big data to deliver business outcomes. With shares up around 15% after hours, we believe the market has calibrated its valuation to reflect the firm’s strong fundamentals and we view the firm’s shares as fairly valued.

We believe Palantir is well-placed for long-term financial success as a leader in the artificial intelligence/machine learning, or AI/ML, platforms space. Palantir’s two main platforms, Gotham and Foundry, are well-suited to help governments and commercial clients harness the power of data. Palantir’s platforms stand to materially benefit as organizations seek to expand their use of data to inform business decisions. We expect this secular tailwind to allow Palantir to land more clients while also expanding revenue from existing ones.

We believe Palantir is well-placed for long-term financial success as a leader in the artificial intelligence/machine learning, or AI/ML, platforms space. Palantir’s two main platforms, Gotham and Foundry, are well-suited to help governments and commercial clients harness the power of data. Palantir’s platforms stand to materially benefit as organizations seek to expand their use of data to inform business decisions. We expect this secular tailwind to allow Palantir to land more clients while also expanding revenue from existing ones.

We are lowering our fair value estimate for narrow-moat Palantir to $8 from $13 as we are less optimistic about the company's long-term profitability and revenue growth. Along with reduced profitability, we are also lowering our Capital Allocation rating for the firm to Standard from Exemplary. Our change in the Capital Allocation rating is primarily driven by reduced confidence in Palantir's management team's ability to execute against the firm's long-term targets. A particular strategic misstep worth noting has been Palantir's risky investments in early-stage companies which have soured in the 2022 market correction. We view shares as fairly valued today but see opportunities elsewhere in the fast-growing technology sector.

We are maintaining our $13 fair value estimate for narrow-moat Palantir after the firm reported third-quarter results broadly in line with our expectations. Despite the near-term challenges posed by harsh macroeconomic conditions, we reiterate our belief in Palantir’s long-term growth potential. We expect the firm’s top line to become more predictable due to a continued diversification of the firm’s revenue as commercial sales increase as a percentage of total sales. Shares were hit hard upon the release, down around 7% after markets opened. With shares trading solidly below our fair value estimate, we consider Palantir as attractively priced for investors that can tolerate near-term volatility.

We believe Palantir is well suited to help organizations consolidate and harness the power of data. With its leading position in the government sector with the U.S. and its allies and a growing presence with commercial data applications, we think this narrow-moat company is poised for robust growth and margin expansion as deployment costs are optimized and product acceptance hastens with task-specific modules.

We are lowering our fair value estimate for narrow-moat Palantir Technologies to $13 per share from $16. Our decrease is largely due to continued near-term macroeconomic headwinds resulting in less software spending, uncertainty in some of its larger contracts, and a disappointing outlook for the full year. Shares were hit extremely hard upon the release, down over 12% to slightly under $10 per share. Despite our more conservative estimate, Palantir remains undervalued, in our view, and our strong belief in its long-term growth potential is unchanged. We are also encouraged by Palantir’s continued effort to diversify its revenue streams, particularly within its commercial business to help mitigate lulls in revenue derived from contract timing.

We believe Palantir is well suited to help organizations consolidate and harness the power of data. With its leading position in the government sector with the U.S. and its allies and a growing presence with commercial data applications, we think this narrow-moat company is poised for robust growth and margin expansion as deployment costs are optimized and product acceptance hastens with task-specific modules.

We are lowering our fair value estimate for narrow-moat Palantir to $16 from $27 as we are taking a more conservative stance on our long-term profitability assumptions. Nonetheless, our new fair value estimate is still solidly above the company’s current share price. We continue to believe that the market’s reaction to recent macroeconomic events has been overdone, with many high-quality software names put to the sword as investors fled from tech.