Palantir delivered fiscal fourth-quarter earnings that topped the estimates analysts had set for the analytics tools builder. However, they weren't enough for investors and analysts to look past the company's lofty valuation. In the third quarter, the company earned an adjusted 21 cents per share on $1.18 billion in revenue. That exceeded the 17 cents and revenue of $1.09 billion that analysts polled by LSEG had penciled in. Revenue from Palantir's U.S. government business rose 52% year-over-year to $486 million. Optimism over government sales have continued to prop the stock up, despite the ongoing shutdown. The company recently cemented a $10 billion contract with the U.S. army. Yet shares were 7% lower on Tuesday morning. While analysts praised the strength of Palantir's underlying business, they also expressed concern over the company's elevated valuation. The stock trades at more than 200 times forward earnings, while the S & P 500 trades at more than 20 times earnings. "We remain very positive on the fundamentals and it is only valuation that keeps us Neutral rated," UBS wrote. Jefferies analysts, in a note titled "Numbers are Great, Valuation is Extreme", said: "PLTR now trades at 83x CY26E revenue. Even under a bullish scenario where the company accelerates to a 60% 4-year CAGR, the stock would need to trade at 27x CY28E revenue just to justify its current price. We believe the risk/reward is unfavorable as the current valuation is susceptible to any downtick in the AI hype cycle." Here's what analysts at some of Wall Street's biggest shops had to say on the report. Goldman Sachs: neutral rating, $188 price target Analyst Gabriela Borges' new price target, raised from $141, implies about 9% downside from Monday's close. "The more muted stock reaction after hours is in the context of high expectations (recall last quarter, Palantir beat revenue by 7%) and significant outperformance (+175% YTD). … We continue to view Palantir as one of only a handful of software companies that is clearly benefiting from AI deployments today." Citi: neutral, $190 Citi's forecast corresponds to downside of around 8%. "With accelerating TCV [total contract value] and US TCV in the Q (151% YoY and 342% YoY) we expect the stock to trade up even with the most recent run." Deutsche Bank: hold, $200 Deutsche's target, up from $160, calls for 3% downside going forward. "Living up to its elevated multiple, Palantir's 3Q results, were amongst the most impressive we've seen in our many years covering the Software industry. At real scale, revenue +63% y/y exceeded the Street's +50%, and accelerated for the 9th consecutive quarter, driven by broad-based strength with US Commercial +121% leading the way and now 34% of the mix. Equally impressive were 71% incremental margins driving total non-GAAP operating margin to 51% for a total 114% on the well-known 'Rule of 40' measure, or in Palantir's case what seems closer to a rule of 140." Jefferies: underperform, $70 Analyst Brent Thill's new target, up from $60, signals downside of more than 66%. "US demand is clearly booming and results were strong. ... We are fundamental fans and the numbers speak for themselves, but we believe the risk/reward at 83x CY26E rev is unfavorable and prefer to own AI in other ways." Baird: neutral, $200 The firm raised its price target from $170 per share. "Government remain key drivers, growing 121% and 52% YOY (vs. 93% and 53% in Q2). Q4 guidance of 61% revenue growth and 53% operating margins was also above prior expectations. While continued revenue acceleration and AI leadership could continue to drive shares, valuation has kept us Neutral." Morgan Stanley: equal weight, $205 Analyst Sanjit Singh's forecast, up from $155, is 1% below Palantir's Monday close. "Revenue accelerates for the 9th qtr in a row to +63% on op margins of 51%. Momentum looks poised to continue with Q4 guidance calling for +61% growth on the back of monumental bookings in Q3. We applaud the execution." UBS: neutral, $205 The bank lifted its price target from $165. "Palantir reported its 9th straight quarter of revs growth acceleration, a turnaround that we've never seen before, from +13% in 2Q23 to just-reported 3Q25 growth of +63%, impressive growth while at a $4.7 billion revs scale. The key takes for us are twofold – a) with a modest beat, the guide implies even faster growth in 4Q25 (we're modeling +67%) and b) US commercial TCV/bookings of $1.3 billion were +342%, materially improving the revs growth visibility in the coming years. Palantir's quarter is a positive read-through to the broader data software segment. We remain very positive on the fundamentals and it is only valuation (157x CY26e FCF) that keeps us Neutral rated." Bank of America: buy, $255 Bank of America's new target, up from $215, equates to 23% upside. "We continue to view Palantir as the best-in-class AI enabler, integrator, architect, and developer across peers. We see this demonstrated in PLTR's accelerating growth, customer upselling, and new wins … We anticipate the acceleration will continue as PLTR benefits from a larger network effect of its customers. Along with the revenue expansion from the growing user base, we see significant margin growth."
