Palantir Technologies: Risks and Expectations

Palantir Technologies (NASDAQ:PLTR) is receiving cautious approaches from analysts despite strong quarterly results. The analyst from Freedom Capital Markets, Almas Almaganbetov, raised the price target from $170 to $125 while maintaining a 'Sell' rating on the stock. The analyst noted that the stock is priced excellently.

According to the third-quarter results, Palantir generated $1.18 billion in revenue, and the adjusted operating margin was recorded at 51%. U.S. commercial revenues showed a year-over-year increase of 121%, and record orders were received for the AIP platform.

However, after the report, PLTR shares declined by approximately 7%, and following a 127% rally year-to-date, they have reduced their gains. Almaganbetov indicated that growth might slow down after next year, influenced by factors such as the normalization of U.S. commercial momentum, tightening defense and government budgets, and rising costs of hiring for artificial intelligence capabilities.

The analyst pointed out that the current valuation leaves little room for disappointment, and that any slowdown in growth rates could lead to downside risks. This situation highlights the tension between rapid artificial intelligence adoption and overly high expectations, potentially encouraging investors to reassess their exposure to enterprise AI and defense-focused software.