Citigroup Initiates Bullish Stance on Palantir, Citing AI “Supercycle” Potential

Palantir US69608A1088

In a significant vote of confidence from Wall Street, Palantir Technologies received a major upgrade from Citigroup on January 12, 2026. The bank shifted its rating on the AI software firm's stock to "Buy," forecasting a coming "supercycle" in both government and commercial sectors. Despite trading approximately 14% below its all-time high from early November 2025, analysts at the institution see substantial upside ahead.

Citigroup analyst Tyler Radke elevated Palantir from a "Neutral" to a "Buy/High-Risk" stance. Concurrently, the firm's price target was raised from $210 to $235 per share, implying a potential 32% gain from current levels. In his January 12 research note, Radke painted a picture of aggressive expansion for the company.

"We expect 2026 to be another year of significant positive estimate revisions," Radke wrote, pointing to accelerating AI budgets and expanding enterprise use cases.

The bank's projection includes a path to 70-80% total revenue growth for the current year. This outlook is supported by several key drivers:

• Government Segment: Anticipated growth of 51%, with an optimistic scenario exceeding 70%.
• Remaining Deal Value (RDV): This metric demonstrated year-over-year growth of over 250% in the third quarter of 2025.
• Defense Supercycle: Increasing military expenditures and modernization efforts among U.S. allies.

Citigroup noted that Palantir has effectively "broken" traditional valuation rules, arguing that its impressive growth acceleration and margin expansion continue to justify a premium market valuation.

Earnings and Valuation in Focus

The stock's valuation remains a central topic for investors. Shares currently trade at roughly 109 times sales, making Palantir by far the most expensive stock in the S&P 500 index. For context, AppLovin, the index's second-most expensive equity, trades at a multiple of 40. The price-to-earnings ratio stands at approximately 415, reflecting market expectations for sustained hypergrowth.

Radke acknowledged these high multiples but contended that Palantir has proven its ability to defy conventional valuation frameworks.

This perspective is bolstered by recent financial performance. On November 3, 2025, Palantir reported quarterly results that handily surpassed expectations. Revenue jumped 63% to $1.18 billion, with U.S. commercial business soaring 121%. Adjusted earnings per share of $0.21 beat the consensus estimate of $0.17.

Wall Street Sentiment Turns Increasingly Positive

The upgrade from Citi aligns with a broader wave of optimistic assessments from major financial institutions. According to LSEG data, earnings estimates for 2026 have risen by 19% over the past 90 days. Meanwhile, the average analyst price target has climbed 23% to $188 per share.

In December, Bank of America reaffirmed its $255 price target—the highest on Wall Street. Analyst Mariana Perez Mora emphasized that Palantir remains "unmatched in its ability to deliver production-ready solutions quickly." Morgan Stanley raised its target from $155 to $205 in November, labeling the company an "emerging enterprise AI standard."

Wedbush analyst Dan Ives selected Palantir as one of his top picks for 2026, describing a "golden path" toward a $1 trillion market capitalization.

Upcoming Catalyst: Q4 2025 Report

Market attention now turns to Palantir's fourth-quarter 2025 results, scheduled for release in early February 2026. Following a series of earnings surprises in the prior year, expectations remain elevated.

Current analyst consensus, as polled by LSEG, shows a mixed but leaning-positive view: of 29 analysts, 27.6% recommend a "Buy," 62.1% suggest a "Hold," and 10.3% advise selling. The average price target of $192.88 points to moderate upside potential. However, the wide range of estimates—from Bank of America's bullish $255 target to more conservative assessments—highlights the ongoing debate surrounding the stock's valuation.