Planet Labs (PL) Is Storming into Defense and the Rally Is Far from Over

Planet Labs (PL) is storming into defense, and Wall Street is taking notice fast. The company was once viewed mostly as a leading satellite imagery provider, but that story has changed dramatically. Planet is increasingly looking like an intelligence platform built for a world that values speed, automation, and real-time awareness.

A big part of that shift comes from on-orbit artificial intelligence (AI), growing demand from sovereign customers, and a backlog that suggests governments are buying much more than basic imagery. That is why I remain bullish on PL and believe the rally still has room to run: the business is growing into its valuation faster than most people realize.

From Pixels to Predictions

In the first few years as a public company, Planet Labs was essentially viewed as just an imagery provider. The company could capture large amounts of Earth imagery data, yet turning it into actionable information often took time. Images had to be sent to the ground, processed, and reviewed before they could be useful, which made it harder for Planet to compete for the most time-sensitive defense work.

That is starting to change with the company’s push into Orbital Intelligence. The company is successfully deploying AI-based object detection directly on its Pelican-4 satellite. Planet showed it can run inference in orbit rather than waiting for everything to be processed on the ground. That is quite the step forward, and one that points to a very different kind of business.

According to the company, in the first onboard AI object‑detection test on its Pelican‑4 satellite over Alice Springs, Australia, the system achieved roughly 80% accuracy on raw imagery. This provides Planet with an early proof point that its technology can move beyond image collection toward real-time intelligence. It also changes Planet’s position in the value chain: if the company can process imagery onboard at an altitude of roughly 500 kilometers above Earth, it can reduce latency from hours to minutes.

The actual product is no longer the image itself but the insight it yields. For defense customers, this is all that matters. An alert that identifies a new aircraft on a runway is far more useful than a large raw image file that must still be downloaded, processed, and interpreted. That makes Planet’s network more valuable as an operational asset. So it’s no wonder their backlog reached a record $900 million last quarter, up nearly 80% year-over-year.

The $900 Million Shield and the New Catalyst Mix

What I like about this shift is that it can also build on itself. As Planet’s broader intelligence strategy gains traction, the company is no longer being judged only against traditional imagery providers. It is starting to operate in a more valuable part of the market, where customers start to care about actionable data. The growing backlog suggests that government and intelligence customers increasingly view Planet as a system capable of delivering persistent, global awareness.

Moreover, the momentum is not limited to the AI milestone. Planet is also benefiting from several important catalysts, like its R&D partnership with Google (GOOGL) on space-based data infrastructure and a growing list of sovereign wins, such as its recent contract in Sweden. Stitching all this together, you realize that the hardware risk, that is, the “space is hard” part, is becoming secondary to the software utility.

Also, the Pelican and forthcoming Owl constellations are being designed from the ground up to be AI-native. This means the more satellites they launch, the smarter the network becomes, and the more “sticky” those government contracts get. When you have a 98% recurring annual contract value, you aren’t a commodity business. You are a mission-critical utility for the modern geopolitical era.

Buying the Future at a Premium

If you bought PL a year ago, you’re likely sitting on a huge gain. Some positions have swung well into triple‑digit territory, which is the kind of move that usually makes value investors break out in hives. We’ve seen a massive valuation expansion, with the forward price-to-sales (P/S) multiple rocketing from about a humble 2x to roughly 30x. This looks like a bubble. However, the ongoing acceleration sort of explains that as well. In Fiscal 2025, revenue growth was just 11%. By Fiscal 2026, it jumped to 26%, and the most recent quarter clocked in at 41%.

Yes, the forward sales multiple of roughly 30x is painfully rich, especially for a company that remains unprofitable on a GAAP basis and likely will stay that way for a while as it reinvests every dime back into R&D. However, we have a recent precedent for this: Palantir (PLTR). When a company sequentially accelerates growth from the low‑teens to the high‑20s, then to the low‑40s, the market stops caring about today’s earnings and starts obsessing over the terminal value.

If Planet can push that growth toward the 50% or 60% mark by monetizing this on-orbit AI, the multiple becomes sustainable. The risk? Of course, there’s the “space risk,” potential dilution, or a sudden cooling in defense spending. However, in a world that is getting more uncertain, the case for a real-time, AI-powered eye in the sky is too compelling to ignore.

Is PL Stock a Buy, Sell, or Hold?

Despite the stock’s unbelievable rally, Planet Labs maintains a Strong Buy consensus rating on Wall Street, based on eight Buy and two Hold ratings. Notably, no analyst rates the stock a Sell. Further, PL’s average price target of $34.78 implies about 1% upside over the next 12 months.

Conclusion

Planet Labs has moved beyond just being a data collector and is increasingly becoming an intelligence partner. The stock still demands strong execution, and the valuation reflects that. Even so, the rapidly growing backlog and early validation of its on-orbit AI suggest this story may still be in its early stages.