‘Time to Get Back In,’ Says Citigroup About Palantir (PLTR) Stock

Palantir (NASDAQ:PLTR) stock has made the most of the AI frenzy – perhaps a little too much. After climbing an eye-popping 2,440% over the past 3 years, the rally has left investors asking whether the valuation is still grounded in reality, even as the big data company continues to deliver real-world growth.

But Citigroup analyst Tyler Radke, who previously sat on the sidelines, now believes it’s time to back the stock. After revisiting his assumptions, Radke upgraded Palantir shares from Neutral to Buy/High-Risk and raised his price target to $235 from $210. If his view plays out, the stock has 37% upside left. (To watch Radke’s track record, click here)

“Our upgrade is premised on our view that 2026 is poised to be another year of significant positive estimate revisions, with recent CIO + industry conversations suggesting AI budget and use cases are accelerating in the enterprise,” the analyst explained.

Radke sees 2026 trends in enterprise AI and agentic expansion, along with the renewed global focus on defense, as closely aligned with PLTR’s strengths in data ontology and forward-deployed engineering. With the company reporting more than 250% year-over-year growth in adjusted RDV (remaining deal value) in Q3 – a measure of potential expansion with corporate clients – and early signs that AI is “accelerating migration/deployment efficiency,” Radke believes there’s a path toward a potential upside of roughly 70–80% total revenue growth in 2026.

Regarding the Government segment, Radke’s growth forecast for FY26 is 51% y/y, roughly 800 basis points above consensus, with his upside scenario exceeding 70%. The outlook reflects the analyst’s expectation of a “ramping defense supercycle” and potential tailwinds from lapping the 2025 government shutdown, as well as modernization efforts among U.S. allies. “We will be closely watching Golden Dome and other major defense initiative announcements as potential catalysts through the year (though these should be larger 2027 impacts),” Radke further said.

Regarding the Government segment, Radke’s growth forecast for FY26 is 51% y/y, roughly 800 basis points above consensus, with his upside scenario exceeding 70%. The outlook reflects the analyst’s expectation of a “ramping defense supercycle” and potential tailwinds from lapping the 2025 government shutdown, as well as modernization efforts among U.S. allies. “We will be closely watching Golden Dome and other major defense initiative announcements as potential catalysts through the year (though these should be larger 2027 numbers impacts),” Radke further said.

Additionally, the analyst thinks Palantir’s value-based pricing model might serve as an important tailwind for sustaining growth acceleration. Customers are increasingly reporting tens – or even hundreds – of millions in cost savings through the Palantir Foundry and AIP platforms. At the Citi IT Day, Radke notes that the team hosted one of Citi’s IT leaders responsible for the Palantir contract, who highlighted how rapid proof-of-concept and implementation can significantly reduce both time and cost.

Furthermore, Palantir’s pioneering of the FDE (Forward Deployed Engineer) model – where engineers work closely on-site with clients to customize and implement solutions – is gaining strong validation across the software industry. More peers are adopting their own FDE strategies, particularly as AI adoption grows. This approach is proving to be “highly efficient and effective,” as highlighted in partner discussions at the Citi GenAI Summit and Cloud Forum at ReInvent, and is now being embraced by major players like ServiceNow and Salesforce.

All of that helps explain why Citigroup has turned bullish. Still, Wall Street as a whole remains divided. Radke has now joined 4 other PLTR bulls, but the majority are staying cautious. With 10 Holds and 2 Sells alongside the Buys, Palantir carries a Hold (i.e., Neutral) consensus rating. The forecast calls for 12-month returns of ~13%, considering the average price target stands at $192.88. (See PLTR stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.