Citi has released a research report, stating that the US commercial operations of data analytics and artificial intelligence software company Palantir Technologies Inc. (PLTR) are poised for a strong rebound this quarter. Consequently, the bank has significantly raised its earnings expectations for FY2027.

Citi analyst Tyler Radke noted in the report that he expects Palantir Technologies Inc.'s (PLTR) US commercial business to recover from an "unexpected slowdown" in the first quarter. This rebound is primarily driven by a shift in corporate resource priorities and the continued rollout of its artificial intelligence platform (AIP) across new industries and regions. Radke stated that feedback from his conversations with the company's partners has been generally positive, bolstering his confidence in the outlook.

Based on this, Radke has raised his overall revenue growth forecast for Palantir Technologies Inc. (PLTR) in FY2027 to 53%, well above the roughly 45% consensus estimate from Wall Street analysts. Revenue from the commercial business is expected to grow 67% year-over-year. Citi also anticipates that the net addition of the company's US commercial Remaining Deal Value (RDV), a key indicator of future revenue, will rebound to the high levels seen in the second half of 2025.

On the government business front, Citi believes there are multiple positive factors, including expanding use cases at the Department of Defense and a contract from the Department of Agriculture expected to drive growth in the second half of the year.

Despite the significant upward revision in earnings expectations, Citi has lowered its price target for Palantir Technologies Inc. (PLTR) from $225 to $200, citing compression in valuation multiples. The bank maintains a "Buy" rating on the stock, viewing its risk-reward profile as more attractive at current levels.

Palantir Technologies Inc. (PLTR) shares have fallen more than 30% year-to-date, primarily due to waning market enthusiasm for high-valuation AI concept stocks. Citi's move to lower its price target while raising expectations reflects a balancing act between the company's strong fundamentals and the digestion of its valuation. The market will be closely watching Palantir Technologies Inc.'s (PLTR) second-quarter financial results, scheduled for release after the market close on August 3rd, to confirm the rebound trend in its commercial business.