Despite a challenging start to the year for its share price, Palantir Technologies Inc. has secured a significant vote of confidence from Wall Street. Daiwa Capital Markets upgraded its rating on the data analytics firm from Neutral to “Buy,” pointing to robust quarterly performance and a powerful strategic shift as key drivers for the optimistic outlook.
Quarterly Results Exceed Expectations
The upgrade follows Palantir’s fourth-quarter 2025 earnings report, released on February 2, 2026, which surpassed market forecasts. The company demonstrated accelerating growth for a tenth consecutive quarter.
Key financial highlights included:
* Q4 Revenue: $1.41 billion, exceeding the guided range of $1.327-$1.331 billion.
* Year-over-Year Growth: Revenue surged 70%.
* Adjusted Earnings Per Share: $0.25, beating the consensus estimate of $0.23.
* U.S. Commercial Revenue: This segment skyrocketed 137% to $507 million.
* Net Revenue Retention: A robust rate of 139%.
For the full fiscal year 2026, management provided revenue guidance of $7.182 to $7.198 billion, representing approximately 61% growth at the midpoint.
Strategic Pivot to Existing Customers Fuels Growth
Daiwa analyst Shigemichi Yoshizu identified the company’s artificial intelligence-powered expansion, particularly within its established client base, as the primary catalyst for the rating change. The strategy of deepening platform integration with current customers, rather than pursuing aggressive new client acquisition, is yielding substantial results.
Enterprises are moving decisively from limited pilot programs to full-scale deployment of AI solutions built on Palantir’s Artificial Intelligence Platform (AIP). This transition is leading to larger contract values even as customer growth remains measured, significantly boosting the average revenue per user (ARPU).
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“We see a high probability that the company will continue this business model focused on growth through existing customers in the near term,” Yoshizu noted, adding that current profit projections appear achievable.
Shares Face Pressure Amid High Valuation
The fundamental strength contrasts with the stock’s performance in 2026. After three years of triple-digit percentage gains (167% in 2023, 340% in 2024, and 135% in 2025), Palantir’s shares have retreated more than 20% since the beginning of the year.
As of February 11, the stock traded around $135.68, marking a daily decline of 2.75%. This price sits considerably below its all-time high of $207.52, reached on November 3, 2025.
Valuation remains a focal point for investors. With a price-to-sales ratio of approximately 59 based on 2026 estimates, the market is pricing in a significant premium for future growth. The broader software sector is under scrutiny as investors reassess valuations in light of potential AI-driven market disruption.
Mixed Sentiment on Wall Street
The bullish call from Daiwa reflects a divided analyst landscape. While some firms emphasize Palantir’s leading position in the enterprise AI platform market, others maintain a cautious stance due to its rich valuation. The key question for the market is whether the company can sustain its rapid growth trajectory while simultaneously expanding profitability.
Investors will gain further insight when Palantir reports its first-quarter 2026 results on May 2.
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