Palantir Is Not the Next $1 Trillion Stock. Here’s Why Citi Just Hit the Brakes

Palantir’s (PLTR) rally hasn’t just been about fundamentals, it’s been fueled by AI hype. But Citi just issued a sobering reality check.

In a new research note, analyst Tyler Radke reiterated a Neutral rating and $115 price target, warning investors not to get too far ahead of fundamentals. This isn’t a hit piece, but it is a pointed reminder that a compelling story doesn’t always mean a compelling valuation.

Citi’s Sit-Down with Palantir: What’s Working, What’s Worrying

Citi (C) recently sat down with Palantir management. The company was upbeat, especially about the adoption of its Artificial Intelligence Platform (AIP). This platform integrates Palantir’s traditional data tools with generative AI models. It’s their hot new product—and yes, it’s growing.

But Radke didn’t bite on the optimism. Why? Because growth in one segment doesn’t erase structural concerns. The financial services division, once a weak spot, just landed Citi itself as a client. That’s symbolic. But for the valuation Palantir trades at, symbolic wins aren’t enough.

Palantir Faces Government Risk as Trump Disrupts Federal Spending

Palantir has long been seen as a government contractor juggernaut. But even that engine is showing signs of strain. Citi notes that government deal flow has grown volatile in recent months due to budget cuts and personnel shakeups tied to the Trump administration.

There’s some speculative chatter around Palantir’s potential involvement in the Golden Dome missile-defense initiative. But the company stayed vague. Translation: there’s no confirmed revenue from that yet. Hope isn’t a business model.

Why Palantir’s Valuation Doesn’t Add Up

Palantir is trading at nosebleed levels. Its forward P/E ratio is over 210. The S&P 500? Around 22. The market is pricing in near-perfect execution and a pipeline of massive, recurring deals.

Radke flagged the danger clearly: if those contracts don’t land, this valuation collapses under its own weight.

Even more damning is the enterprise value-to-sales ratio of nearly 72. For context, Radke notes that software companies trading above 50x EV/sales historically underperform. In plain English: history is not on Palantir’s side.

What Is the Target Price for Palantir?

If Citi’s note wasn’t sobering enough, the broader Wall Street picture only sharpens the warning. According to TipRanks, the average 12-month price target for Palantir stock sits at $102.44. That’s a 24.4% downside from where it currently trades.

Even more telling: only three analysts out of 18 rate the stock a Buy. The majority, 11 analysts, say Hold, while four recommend Sell. That’s a lukewarm endorsement at best, and an outright vote of skepticism at worst.

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