Palantir's strong growth faces higher expectations; analysts flag valuation and booking concerns

What happened

Palantir shares fell about 6% in premarket trading Tuesday even though the company reported revenue of $2.31 billion, up 96% from a year earlier. Analysts cited high expectations for U.S. commercial growth and concerns about slowing bookings.

Confirmed

Global impact / market context

Palantir's stock trades at 33 times its expected 2027 revenue, a rich price that leaves little room for slowing growth. If U.S. commercial revenue growth keeps cooling, the stock could fall further even while reported revenue rises quickly.

Analyst inference

Morgan Stanley raised its price target to $233 from $205, citing sovereign AI, meaning government-run artificial intelligence, and open-weight models. Jefferies sees better risk-reward in Microsoft, Snowflake, and Oracle, suggesting some investors may rotate money toward cheaper software stocks.

Analyst inference

What to watch

1. U.S. commercial revenue grew 148% year over year, down from 149% in the prior quarter, and a tougher fourth-quarter comparison suggests growth could decelerate further. Confirmed
2. Analysts at Morgan Stanley proposed a higher price target of $233, up from $205, tied to their view that sovereign AI and open-weight models are a major opportunity. Proposed
3. Watch whether bookings slowdown and tougher comparisons pull future revenue growth below the 96% just reported, which could pressure a valuation that already assumes fast growth. Analyst inference

Evidence

• seekingalpha.com