Palantir’s outstanding fourth-quarter results, rapid growth amid the artificial intelligence arms race, and strategic positioning in the AI-value chain further solidify our base case expectations that this company can be the next software juggernaut. As a result, we are raising our fair value estimate to $90 from $79.
This quarter’s results highlight Palantir’s exemplary execution and continued penetration of the US commercial market, with 73% more US customers than a year ago and 63% growth in US commercial revenue year over year. US Government revenue remains sticky, growing a robust 45% year over year, with a potential second-half 2025 tailwind from the Department of Government Efficiency as it looks to slim down government budgets.
We are witnessing increasing adoption of the artificial intelligence platform, which is acting as a revenue accelerant since it can utilize any large language model to ultimately drive productivity gains and democratize machine learning for non-technical users across organizations. While most of this customer and revenue acceleration is driven by US enterprises, even a fraction of this growth replicated in Western Europe could provide additional upside to our valuation.
Switching Costs a Key Advantage for Palantir
We continue to view switching costs as a key moat source as customers adopt Palantir’s software and deepen their investment through various add-on opportunities. This is reflected in net revenue retention which now hovers around 120% and continued an upward trend quarter over quarter.
This quarter’s results further reinforce our conclusion that we are in the early stages of an AI arms race, where most of the economic value is flowing downstream—both to software companies that make AI “work” and to enterprises leveraging AI for productivity gains. We continue to believe that Palantir’s best days are ahead and that the company has a significant runway for its bull case to emerge.
Palantir Technologies Stock vs. Morningstar Fair Value Estimate
Source: Morningstar Direct. Latest price as of 8:35 AM ET.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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