UBS Upgrades Palantir, Sees Buying Opportunity After Steep Decline

UBS upgrades Palantir to Buy with a $180 target after a 35% stock pullback, citing a key defense authorization and record Q4 revenue growth of 70%.

A significant pullback in Palantir Technologies Inc.'s share price has prompted a major shift in stance from UBS. The Swiss investment bank has upgraded its rating on the data analytics firm from Neutral to Buy, establishing a price target of $180 per share. According to UBS analyst Karl Keirstead, the stock's 35% decline from its all-time high presents a strategic entry point into what he considers the premier growth narrative in the software sector. This revised outlook coincides with the company reporting record financial performance and securing a pivotal authorization for its defense-related platforms.

Defense Unit Gains Crucial Authorization

In a significant development for its government contracting business, Palantir has received authorization from the Defense Information Systems Agency (DISA) for its Palantir Federal Cloud Service (PFCS) Forward. This clearance allows the full suite of the company's technology—including the Apollo, Gotham, and Foundry platforms, along with its Artificial Intelligence Platform (AIP)—to be deployed on any approved hardware and in any environment under a "authorize once, use many" framework. The streamlined process eliminates the need for location-specific implementation reviews and security assessments, saving potential government clients considerable time and accelerating deployment cycles from data centers to tactical edge operations. This expansion is expected to positively influence both the scale of contracts and their durations.

Record Financials Underpin Bullish Case

The upgrade is fundamentally supported by Palantir's exceptional fourth-quarter 2025 results. Revenue surged by 70% year-over-year to $1.41 billion, marking the company's highest growth rate since its public listing. Its commercial business in the United States skyrocketed by 93%, now constituting 77% of total revenue. Adjusted free cash flow reached $791 million, representing a robust margin of 56%.

Looking ahead, management has provided 2026 revenue guidance of $7.19 billion, which would equate to 61% growth. Furthermore, the U.S. commercial segment is projected to grow by at least 115% to over $3.14 billion. Morgan Stanley analyst Sanjit Singh noted, "Palantir is on a trajectory toward the $10 billion revenue threshold, potentially achieving it with the fastest growth rate and highest margins in the history of the software industry."

Insider Sales Executed Under Pre-Arranged Plans

Alongside these positive developments, regulatory filings revealed that six high-ranking executives sold shares worth more than $137 million. Chief Executive Officer Alex Karp divested 493,025 shares at an average price of $133.78, a transaction valued at $65.9 million. The filings categorize these sales as automatic dispositions to cover tax obligations associated with vested Restricted Stock Units. Chief Financial Officer David Glazer's sales were executed pursuant to a pre-established 10b5-1 trading plan.

Valuation and Competitive Landscape Questions Persist

Despite the recent correction, Palantir's valuation remains elevated, trading at approximately 200 times earnings and about 70 times sales. Analyst Karl Keirstead at UBS, referencing his 2027 free cash flow estimates, arrives at a multiple of 50, which he deems justifiable given the projected growth trajectory. Key questions for investors center on whether Palantir can sustain its growth rates above 50% over the long term and how increasing competition from rivals like Databricks, major cloud infrastructure providers, and AI specialists such as OpenAI will impact its market position.

A relative area of weakness was highlighted in the international commercial segment, where revenue outside the United States increased by only 8% in Q4. The market will await further clarity when the company reports its next quarterly results on May 11, 2026.