Palantir (PLTR) Stock Gains as Citi Upgrades to Buy on AI and Defense Contracts

TLDR

• Citi Research upgraded Palantir Technologies (PLTR) to Buy from Neutral with a price target raised to $235 from $210
• Palantir stock surged 135% in 2025, crushing the S&P 500’s 16% gain during the same period
• Analyst Tyler Radke expects continued growth driven by enterprise AI adoption, AI agents, and increased global defense spending
• The stock trades at a forward P/E ratio of 177.61 compared to the S&P 500’s 22.49, but bulls say valuation is justified
• Citi estimates fiscal 2026 government revenue growth at 51% year-over-year, roughly 800 basis points above consensus expectations

Palantir Technologies got a vote of confidence from Citi Research on Monday morning. Analyst Tyler Radke upgraded shares to Buy from Neutral and bumped his price target to $235 from $210.

Palantir Technologies Inc., PLTR

The stock climbed 0.7% in premarket trading following the upgrade. Shares had already gained 135% in 2025, leaving the S&P 500’s 16% increase in the dust.

Radke believes the data analytics company has “broken” traditional valuation frameworks. The stock trades at a forward price-to-earnings ratio of 177.61 as of Friday’s close. That’s nearly eight times the S&P 500’s multiple of 22.49.

But the analyst isn’t worried about the stretched valuation. He thinks Palantir’s growth story has more room to run.

The upgrade comes as the stock has traded sideways despite Radke raising his revenue estimates by more than 10% since mid-year. He expects 2026 to bring another wave of positive estimate revisions.

Recent conversations with chief information officers and industry contacts suggest AI budgets and use cases are picking up speed in the enterprise sector. That plays right into Palantir’s wheelhouse.

Enterprise AI and Government Defense Spending

The company’s strength in data ontology positions it well for 2026 themes. Enterprise AI adoption is accelerating. AI agents are gaining traction. Defense spending is ramping up globally.

Radke’s government revenue estimates are particularly bullish. He expects 51% year-over-year growth in fiscal 2026, about 800 basis points above what other analysts are forecasting.

There’s even potential for 70% or higher growth in the government segment. A defense supercycle is building. The 2025 government shutdown created easy comparisons. International allies are modernizing their systems.

Golden Dome and Defense Initiatives

Radke will be watching announcements around Golden Dome and other major defense initiatives. These programs could serve as catalysts throughout the year. The financial impact would likely hit harder in 2027.

Citi raised its estimates alongside the upgrade. The firm now projects higher revenue numbers for both 2025 and 2026. The price target of $235 implies roughly 31% upside from Friday’s closing price of $178.94.

Defense modernization urgency is spreading across U.S. allies. Budget allocations are increasing. Palantir’s government contracts could benefit from both trends.

The company’s commercial business is also seeing momentum. AI project implementations are moving from pilot phases to production deployments. That transition typically brings larger contract values and longer-term commitments.

Citi’s upgrade represents a shift in thinking about Palantir’s valuation. Traditional metrics suggested the stock was overvalued. But Radke argues the growth profile justifies premium pricing.

The analyst’s revenue estimates now sit 10% above where they were in mid-2026. That’s a material increase over a relatively short time period.

Palantir’s data platform has become central to how enterprises and governments approach AI deployment. The company’s ontology layer helps organizations structure and use their data more effectively.

Radke expects government growth to accelerate from an already strong baseline. The 51% growth estimate for fiscal 2026 would represent a meaningful pickup from current levels.

Citi upgraded Palantir stock to Buy with a $235 price target, citing accelerating AI adoption and defense spending despite elevated valuation.

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