Here’s Why Analysts Remain Sidelined on Palantir Stock (PLTR) Despite AI Tailwinds

Palantir Technologies (PLTR) stock has rallied 63% so far in 2025, thanks to the company’s impressive growth, supported by the demand for the data analytics company’s AIP (Artificial Intelligence Platform) offering. Earlier this month, Palantir reported robust top-line growth and raised its full-year revenue guidance, backed by AI tailwinds across its Commercial and Government businesses. However, several analysts remain sidelined on PLTR stock and see downside risk amid macro uncertainties and concerns over the stock’s lofty valuation.

Analysts Are Cautious Despite Strong Financials

Palantir has been seeing robust momentum in its business. It closed 139 deals of at least $1 million in value, 51 deals of at least $5 million, and 31 deals of at least $10 million. The company generated adjusted free cash flow of $370.4 million in Q1 2025, reflecting an impressive 149% year-over-year growth. Moreover, Palantir raised its full-year adjusted free cash flow outlook and now expects it in the range of $1.6 to $1.8 billion. Despite such solid financials, several analysts are cautious or bearish on PLTR stock.

For instance, following the results, RBC Capital analyst Rishi Jaluria reiterated a Sell rating on PLTR stock with a price target of $40. Jaluria acknowledged that the company delivered a “solid” quarter, but noted that the Commercial business missed estimates. While the Government business fared better than expectations, the analyst remains concerned about the “runway for growth and product differentiation.” He continues to believe that PLTR stock’s risk-reward is skewing unfavorable, with the stock trading at a premium multiple.

Further, Citi analyst Tyler Radke raised his price target to $115 from $110 following the Q1 results, but maintained a Hold rating. Radke thinks that the fluctuations in expenses and taxes across quarters make steady execution critical for Palantir. Moreover, the 4-star analyst contends that flawless execution becomes even more important to justify the stock’s steep valuation at 55 times the estimated 2026 sales.

While several analysts have recently flagged concerns about the company’s valuation, PLTR Bulls continue to believe in its growth potential. Last week, Wedbush analyst Daniel Ives reaffirmed a Buy rating on PLTR stock with a price target of $140, after the company received a $795 million contract extension from the U.S. Army for its Maven Smart System software. This was on top of the $480 million contract secured in May 2024, with the total deal value now crossing $1.3 billion and marking Palantir’s first-ever billion-dollar deal. The 4-star analyst thinks that this deal reflects the company’s growing importance in the U.S. government, especially in defense, where its AI software enables data fusion and target identification.

Is PLTR a Good Stock to Buy?

Overall, Wall Street has a Hold consensus rating on Palantir stock based on 11 Holds, four Sells, and three Buy recommendations. The average PLTR stock price target of $100.13 implies about 19% downside risk from current levels.

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