Shares of Palantir Technologies have had a lackluster performance, by their standards, this year even as the company has experienced robust sales growth. J.P. Morgan believes that could change soon.
After rising more than 130% in 2025, Palantir stock's performance has been much more modest this year, with shares advancing about 11% as of the closing bell on Wednesday.
Palantir stock fell 1% to $194.79 on Thursday and was about 7% below its record closing high of $209.05 from Oct. 9.
Wall Street's sentiment, however, has shifted in recent months.
The stock has been on a torrid pace since the company's blowout second-quarter earnings on Aug. 3, rising 56% since then as of the closing bell on Wednesday.
Barron's made Palantir a stock pick on Oct. 5, and shares have risen 4% between then and the closing bell on Wednesday.
J.P. Morgan analyst Brian Essex is getting in on the hype.
Essex on Thursday initiated coverage of Palantir stock with an Overweight rating and a December 2027 price target of $262. That price target represented 33% from the closing price of $196.81 on Wednesday.
The analyst also placed Palantir on J.P. Morgan's "positive catalyst watch" ahead of the company's third-quarter earnings on Nov. 2.
"As we move from a year where enterprises are just figuring out how to deploy the most transformational technology we have seen in our lifetimes to one where they are looking for return, Palantir is already delivering return on investment by leveraging its platform to fundamentally transform the business operations of its customers, and growth is accelerating," Essex said in the research note.
He, of course, is describing artificial-intelligence and sees Palantir as a preferred way to invest in the current AI moment.
"Palantir takes AI past the point of simply automating processes performed by humans. AI has the ability to transform entire business operating models, and this is the value that Palantir has been bringing to the table," Essex said.
Morgan Stanley analysts Adam Wood and Sanjit Singh, meanwhile, said in a research note Thursday that data suggests Palantir's third-quarter revenue should beat estimates as the company's business momentum is expected to continue.
"Checks point to a healthy demand environment with little sign of intensification in the competitive environment," the analysts said.
Morgan Stanley has an Equal weight rating on the stock with a $205 price target.
Wall Street is incredibly optimistic about Palantir's business growth potential, which is underpinned by the U.S. government and commercial businesses delivering strong quarterly results.
Rosenblatt analyst John McPeake, who has long been bullish on Palantir's business prospects, on Monday raised his Palantir stock price target to $260 from $2250 and maintained a Buy rating. McPeake believes Palantir's strong revenue growth will continue into 2027.
The big knock on Palantir stock is that it's quite pricey with a forward price-to-earnings ratio of 89.38 times while the S&P 500 has a forward price-to-earnings ratio of 18.93 times.
Essex wasn't concerned.
"Valuation is reasonable when taking into account the company's uniquely profitable hypergrowth fundamentals, with potential for substantial disruptive upside within its primary market segments," Essex said.
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