By Nate Wolf
Palantir Technologies has had a rough start to 2026. But that may make the artificial-intelligence software company a smart play for investors ahead of its quarterly earnings report on Monday.
Analysts at Oppenheimer initiated coverage of Palantir stock with an Outperform rating and a $200 price target in a research note Thursday. The stock still has a sky-high valuation relative to its software peers, but that premium is justified, the firm argued.
Palantir stock was up 0.8% to $139.03 on Thursday. Shares have slumped 22% this year.
That pullback doesn't look so strange in hindsight. For all its association with AI, Palantir is still a software company and software stocks have gotten whacked in 2026. The stock also came into the year trading at 179 times projected 12-month earnings, putting it among the most expensive large-cap names on the market.
That multiple is now closer to 94-times, and Oppenheimer thinks investors should buy the dip.
"Palantir is quickly becoming the pre-eminent AI application deployment platform among both government and commercial customers," wrote analyst Param Singh. "This, in our opinion, creates a highly valuable, sticky platform, and justifies the premium valuation."
Ontology, Palantir's system for the various applications it builds for clients, is the company's competitive advantage, Oppenheimer said. The platform orchestrates and automates customers' decision-making through AI.
"Once embedded into an organization, switching costs become prohibitive, " Singh wrote. "We view Ontology as an architectural moat, which deepens with each additional workflow that customers build on top of it."
If competitive differentiation is the first thing investors look for when justifying such a high valuation, the second is a huge untapped market.
Palantir has made its name selling to militaries and defense organizations in the U.S., Israel, U.K., Germany, and other countries. With militaries pivoting toward AI and autonomous systems, the company can continue growing this business, Oppenheimer said. The firm projects the addressable market in U.S. and allied governments to grow to $666 billion by 2029, up from $490 billion in 2025.
On the commercial side, Palantir has expanded its customer base to 780 clients in 2025 from 375 in 2023. That number is just scratching the surface, Oppenheimer argued. The firm sees Palantir's customer count growing to nearly 1800 by 2028. This private-sector market is several times the size of the government market.
Unlike some struggling software peers, Palantir's business is connected to the "largest and most rapidly expanding" markets in software, Loop Capital's Mark Schappel said in a research note Wednesday. Schappel has a Buy rating and a $220 price target on the stock.
Not everyone on Wall Street is sold on Palantir heading into next week's report, however. Of the 36 analysts polled by FactSet, 10 remain at a Hold rating and two are at Sell.
Rishi Jaluria of RBC Capital Markets reiterated an Underperform rating and a $90 target in a research note earlier this week. The firm is more cautious about Palantir's commercial growth, seeing signs of potential churn among clients.
Investors may also be growing frustrated by a lack of capital returns in the form of buybacks or dividends, Jaluria said, considering the company's roughly $7 billion cash balance.
Write to Nate Wolf at nate.wolf@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 30, 2026 10:47 ET (14:47 GMT)
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