Citi Upgrades Palantir (PLTR.US) to "Buy," Sees 2026 "Super Cycle" for Commercial and Government Business

Stock News
01/13

Citigroup has upgraded its rating on Palantir Technologies Inc. (PLTR.US) from "Neutral" to "Buy/High Risk," raising its price target to $235, citing expectations that the company will experience a "super cycle" in both its commercial and government sectors this year. Citigroup analyst Tyler Radke noted that Palantir's stock has seen a remarkable surge over the past few years, driven by rapid growth acceleration and equally impressive margin expansion, which has effectively "broken" traditional valuation frameworks like the "Rule of 40." Despite the bank having raised its revenue forecasts for Palantir for 2025 and 2026 by more than 10% since the middle of last year, the stock price has remained largely flat. The rationale behind Citi's rating upgrade is the view that 2026 is highly likely to be another year of significant positive forecast revisions. Recent communications with corporate Chief Information Officers and industry sources indicate that corporate budgets and use cases for artificial intelligence are accelerating. The bank also sees significant tailwinds for Palantir's government business, primarily driven by accelerating defense budgets and the urgency of modernization. Tyler Radke stated that he expects Palantir's government business growth rate to reach 51% in fiscal year 2026, an increase of approximately 800 basis points year-over-year, exceeding market consensus, with the potential to even reach 70% or higher. Tyler Radke added, "This forecast is based on our view of an accelerating defense super-cycle, along with potential tailwinds such as the lagged effects of addressing a potential 2025 government shutdown and the modernization efforts of US allies internationally. We will be closely monitoring announcements related to Project Maven and other major defense programs, which could serve as potential catalysts throughout the year, although they might have a more substantial impact on 2027 figures."

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