After a strong 2025, some experts see Palantir stock as overvalued. However, a top analyst and Citigroup see further potential.
• Palantir shares impress in 2025 with strong growth, strategic partnerships and exclusive orders
• Top analyst sees further potential
• Analyst consensus remains mixed
This is how 2025 went for Palantir
In 2025, Palantir stock experienced a significant upswing. Within just one year, the stock listed on the NASDAQ gained a whopping 135.03 percent.
The company attracted investors’ attention primarily through exclusive defense contracts from the US military, partnerships with NATO and various strategic partnerships that were concluded last year.
For example, a joint project with TWG Global that was announced last March is intended to fundamentally change the use of artificial intelligence in the finance and insurance industry.
In April, Palantir won a new government contract from U.S. Immigration and Customs Enforcement (ICE) worth about $30 million. The aim of the project is to develop an “Immigration Lifecycle Operating System” (IMOS) that will digitally map the entire immigration administration process.
A partnership with NATO followed shortly afterwards. To modernize its digital and operational capabilities, the alliance is working with US data analytics company Palantir, co-founded by German entrepreneur Peter Thiel in 2004. In this context, the company should deliver the Maven Smart System NATO (MSS NATO) – an AI-supported platform that will be used in Allied Command Operations (ACO) in the future.
The U.S. Department of Defense also announced in May that Palantir had received a $795 million contract modification for its Maven Smart System. This expansion increases the total volume of the project to approximately $1.3 billion over the following four years. According to the Pentagon, the completion of the order is scheduled for May 28, 2029. The Mave Smart System is a Department of Defense AI platform that integrates data for faster military decision-making in targeting, logistics and battlefield situational awareness.
High valuation justified according to analyst James Foord
Recently, however, the paper has lost momentum. The high valuation of the AI company could increasingly become a braking factor, as TipRanks explains. With a price-earnings ratio of around 400, the stock remains expensive, and critics see the current market valuation as excessive compared to competitors.
Top investor James Foord, who is one of the most successful 2 percent of analysts tracked by TipRanks, only shares this skepticism to a limited extent. “PLTR only appears expensive if you misread the market,” he explains.
He also distinguishes between three development phases of the AI revolution: computing power, infrastructure and software. While the value creation initially lay in hardware components such as chips and GPUs and then shifted to data centers and their supporting systems, he now sees the transition to the crucial third phase. In this, software will become the central driving force – and Palantir is excellently positioned to lead this new stage of AI development.
“AI is maturing, so it’s time to invest in the companies that will actually make a profit from it, rather than spending billions on building the infrastructure,” said Foord.
The analyst points to Palantir’s strong growth potential from rising defense spending and the expanding global business software market, which is expected to grow to around $500 billion by 2030.
This puts Palantir in an exceptionally strong position to benefit from future developments. Thanks to its pioneering status, the company could follow a similar path to success as the first dominant operating systems.
“Palantir is a clear winner, valued accordingly, but in my opinion it is still worth holding the stock for the long term as growth and profits reinforce each other,” said the expert.
Accordingly, he rates Palantir a “strong buy” and sees the stock as a solid long-term investment.
Citi expert: price target increased
Citigroup also maintains its positive view on Palantir and increased its price target from $210 to $235, along with a buy rating, The Street reports. According to the analysts, the high valuation of the share is “not a problem” – in fact, they expect further upward revisions to profit forecasts by 2026.
However, while Citi is betting on long-term growth and strong margins, analysts warn against excessive expectations. Already after the strong figures for the third quarter of 2025, the share collapsed despite exceeding forecasts – investors had assessed the rally as exhausted, explains The Street. A situation that could repeat itself: If the market has already priced in a strong 2026, the next price impulse depends less on the numbers than on the credibility of the future prospects.
Citi still sees Palantir at the start of a “supercycle,” driven by high demand for AI software and robust growth in the corporate and defense sectors. Critics counter that the stock is already trading at a very high sales multiple – and “good” may not be good enough for Palantir on the stock market.
The analyst consensus is correspondingly mixed. According to TipRanks data, there are currently five Buy, ten Hold, and two Sell recommendations, resulting in one Hold recommendation. With an average twelve-month price target of $192.88, there is also a moderate upside potential of around 15 percent compared to the last closing price of $167.47 (as of January 26, 2026).
Editorial team finanzen.net
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