Palantir Technology(NASDAQ: PLTR) Already shattered S&P 500 Index for each of the past three years. This started in 2023, when the growth stock returned more than 167%, and in 2024, it returned an eye-popping 340%. Its momentum has not diminished in 2025, with the stock more than doubling again, up 135%.
at the same time, Citigroup Analyst Tyler Radke thinks the good times will continue into 2026. He recently upgraded the stock to a buy rating and set a price target of $235.
The analyst said discussions with CIOs (chief information officers) lead him to believe that Palantir’s commercial revenue will only continue to accelerate as budgets and use cases increase, while government revenue may be about to take off as the U.S. government makes modernization a top priority. Radke believes this will result in the company continuing to beat analysts’ revenue and earnings estimates and continue to see significant upward revisions.
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Palantir’s strong stock performance is directly related to its accelerating revenue growth, which has improved every quarter since the second quarter of 2023. During this period, its quarterly revenue growth rose from 13% year-over-year in 2023 to 63% last quarter.
The biggest driver of Palantir’s success has come from U.S. commercial customers, which coincides with the launch of its Artificial Intelligence Platform (AIP). The company started out primarily as a government defense contractor, and its Gotham platform is able to collect and analyze data from numerous sources and help spot potential threats. It later brought its data collection and analysis expertise into the commercial world with Foundry solutions, but it didn’t really take off until it paired it with AIP to act as an orchestration layer.
One of the biggest problems with artificial intelligence (AI) is that it can hallucinate and make stuff up. However, having a single source of truth can greatly alleviate this problem and make AI more useful in the real world.
Foundry AIP can collect data from a variety of sources and organize it into an ontology that links the data to its real-world counterpart, whether a physical object or process. With this clean, organized data, customers can use the large language model (LLM) of their choice to provide actionable insights based on their data to help solve problems without fear of AI hallucinations.
Foundry AIP has gained popularity in the U.S. business community as the orchestration layer required to implement artificial intelligence solutions. Last quarter, Palantir’s commercial revenue in the United States surged 121% to $397 million, with growth coming from new and existing customers. The company’s Bootcamp sales model will help organizations build AI-powered tools based on their data in just five days, shortening sales cycles and quickly onboarding new customers.
This can be seen in Palantir’s 45% increase in customer numbers last quarter. At the same time, they are expanding rapidly as existing customers continue to find new use cases. The company’s total U.S. commercial contract value surged 342% in the third quarter, while its net revenue retention was as high as 134%.
The company’s biggest customer, the U.S. government, also saw strong growth as the Trump administration continues its push to modernize the defense and intelligence agencies. Last quarter, its U.S. government revenue jumped 52% to $486 million. International government revenue also grew strongly, with revenue rising 66% to $147 million.
AIP’s status as an AI operating system and the wide range of use cases it can be applied to make Palantir a huge winner for AI in the long run. However, with the stock trading at 49 times forward price-to-sales and 126 times forward earnings, the stock is expensive. It could grow to these multiples if growth can continue to accelerate, but I would prefer to buy on a pullback.
The world’s largest company – NVIDIA, letterand apple — have experienced significant losses throughout their history. So even if Palantir ends up becoming one of the largest companies in the world, the path may not be smooth. Therefore, I would look for downside opportunities in the stock before buying.
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Citigroup is an advertising partner of Motley Fool Money. Geoffrey Seiler works at Alphabet. The Motley Fool holds positions in and recommends Alphabet, Apple, Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
This growth stock continues to crush the market Originally posted by The Motley Fool
