Key Morningstar metrics for Palantir

  • Fair Value Estimate: $150.00 USD
  • Morningstar Rating: ★★ (at 3 February 2026)
  • Morningstar Economic Moat Rating: Narrow
  • Morningstar Uncertainty Rating: Very High

What we thought of Palantir’s earnings

Palantir PLTR shares are up after fourth-quarter results exceeded management’s forecast across nearly all metrics, and it guided to 61% revenue growth in 2026, 15% above FactSet’s consensus. The rule of 40—the sum of revenue growth and operating margin—reached 127%, an all-time high, in the quarter.

Why it matters: While Palantir’s premium valuation multiple and potential for rapid compression remain the core bear thesis, a comparative analysis of prior innovators and their distribution of long-term growth rates gives comfort that Palantir is fairly valued.

  • Palantir trades at roughly 90 times trailing 12-month revenue, a 350% premium over other artificial intelligence firms. We believe the firm needs to deliver an average annual growth rate of 30% over five years (75th percentile in the software universe) to justify investing at these levels.
  • Our analysis of previous technological innovators, dating back to the 1970s, shows that 30% average annual growth over five years is possible, especially when a new category emerges, like Palantir’s ontology framework, and rapid expansion follows.

The bottom line: We maintain our narrow moat and raise our fair value estimate to $150 USD from $135 USD, driven by Palantir’s highest-ever annual growth guidance, the lack of a true competitor to Palantir’s ontological framework, and increased expectations for US commercial adoption.

  • While many software investors have been burned by the “AI displaces software” thesis that has hit many software stocks, Palantir is an outlier. The platform appeals to automation-hungry enterprises by harnessing the latest language models to work with or replace legacy products.

Between the lines: During the earnings call, management continued to characterize Europe as an AI laggard. While we are disappointed to hear this, given the size of the total addressable market, American growth is exceeding our expectations, and we were encouraged to learn that Arab states are exploring access to AI defense solutions.

Palantir’s business

Palantir is a leading AI company that enables optimized decision-making through its proprietary software. The company can aggregate, clean, and analyze the world’s most complex datasets. It derives actionable insights beyond traditional analytics because it creates a closed read-write loop where it engages with all stakeholders and data sources in an organization for a dynamic understanding of any problem. Over time, Palantir’s systems continuously improve, enabling automated, machine-learning-based solutions that drive efficiency gains across entities in any industry.

Forecasting the size of Palantir’s total addressable market is difficult, and we believe this imprecise measurement will drive a lot of share price volatility in the near term, but we don’t think there is another company that combines Palantir’s pattern recognition with customer switching costs, and we expect Palantir’s state-of-the-art AI solutions to achieve rapid growth and adoption over the coming years.

Palantir’s core differentiator is its ontology framework, which uses data to uncover hidden relationships and enable advanced decision-making. The broad scope should appeal to any business, government, or military in the Western world. While growth in Europe has been average, growth in the United States has more than offset this geographic softness, enabling top-of-class net revenue retention and growth in remaining performance obligations.

Palantir’s main business segments are the government-focused Gotham platform and the commercial-focused Foundry platform. The company began its journey exclusively solving military-related problems, but eventually realized that the problems being solved apply to any organization or company type. Thanks to the 2023 release of the Artificial Intelligence Platform, Palantir now provides a layer for large language models to help nontechnical users understand its work. Palantir has also rapidly improved a traditionally long and complicated customer acquisition process through the development of boot camps that act as high-turnover touchpoints with clients, where Palantir exhibits tailored solutions to a customer’s biggest pain points.

Palantir bulls say

  • Palantir has developed the premier AI software, well-positioned to capitalize on trends toward digitization, automation, and reindustrialisation. We believe Panatir’s software maintains a strategic position in the AI value chain as a model orchestrator.
  • Palantir’s ontological framework and AI orchestration allow for the democratization of machine learning. Its software is useful to employees at all levels of a business to drive efficiency enhancements.
  • Palantir stands to disproportionately benefit from a Golden Dome-led fiscal spending boom and lacks a clear competitor.

Palantir bears Say

  • Palantir’s end markets are confined to entities that coalesce with Western ethos. This caps the total addressable market.
  • The decreasing cost of AI inference and the convergence of LLMs will result in lower barriers to entry in the AI decision-making software industry that Palantir currently dominates.
  • Palantir’s high valuation multiple leaves no margin for error in terms of execution. Any fears on the maintainability of growth will be met with sharp selloffs.

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Terms used in this article

  • Star Rating: Our one- to five-star ratings are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, and several other factors. A five-star rating means our analysts think the current market price likely represents an excessively pessimistic outlook and that beyond fair risk-adjusted returns are likely over a long timeframe. A one-star rating means our analysts think the market is pricing in an excessively optimistic outlook, limiting upside potential and leaving the investor exposed to capital loss.
  • Fair Value: Morningstar’s Fair Value estimate results from a detailed projection of a company’s future cash flows, resulting from our analysts’ independent primary research. Price To Fair Value measures the current market price against estimated Fair Value. If a company’s stock trades at $100 and our analysts believe it is worth $200, the price to fair value ratio would be 0.5. A Price to Fair Value over 1 suggests the share is overvalued.
  • Moat Rating: An economic moat is a structural feature that allows a firm to sustain excess profits over a long period. Companies with a narrow moat are those we believe are more likely than not to sustain excess returns for at least a decade. For wide-moat companies, we have high confidence that excess returns will persist for 10 years and are likely to persist at least 20 years. To learn about finding different sources of moat, read this article by Mark LaMonica.

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