Palantir (PLTR) – Update on current recommendation
Palantir’s Q4 print reinforced the core thesis behind our existing recommendation: it is executing as a high growth, highly profitable AI infrastructure provider, but from an increasingly demanding valuation starting point. Q4 revenue came in at about 1.41 billion USD (vs. 1.34…
Palantir (PLTR) – Update on current recommendation Palantir’s Q4 print reinforced the core thesis behind our existing recommendation: it is executing as a high‑growth, highly profitable AI infrastructure provider, but from an increasingly demanding valuation starting point. Q4 revenue came in at about 1.41 billion USD (vs. 1.34 billion consensus), up roughly 70% year on year, with GAAP EPS of 0.24 USD and adjusted operating margin near 57%, placing Palantir firmly in the top tier of software profitability metrics. Growth is increasingly U.S.‑led and commercially driven: U.S. revenue rose about 93% to 1.1 billion USD, with U.S. commercial revenue up 137% and U.S. government up 66%, and total contract value and remaining deal value both more than doubling year on year. Management guided 2026 revenue to roughly 7.2 billion USD (vs. ~6.3 billion Street) and adjusted operating income to about 4.1 billion USD, alongside free cash flow of roughly 4.0 billion USD, signalling confidence that current momentum is sustainable over at least the next couple of years. The share price reaction has been positive but volatile: the stock is still down high‑teens percent year‑to‑date (allowing for a reasonable entry), yet up roughly 80% over 12 months and several hundred percent over two to three years, and it now trades on a trailing P/E above 300x and very high sales multiples, screening as overvalued on most traditional metrics. For MPC portfolios, we continue to treat Palantir as a high‑beta AI exposure where the business is de‑risking (via scale, contracts and cash generation) even as the equity remains pricing in a long runway of high growth and margins. That supports our existing position rather than prompting a change in stance: we see this quarter as a validation of the thesis, but the valuation still argues for disciplined position sizing and an expectation of material volatility around future prints. For MPC subscribers, the way we would frame it is: The bull case strengthened: U.S. commercial is now clearly a second growth engine alongside government; unit economics look excellent; and the 2026 outlook signals confidence that this pace can continue for at least the next couple of years. The risk remains valuation and expectations: the stock is being priced between some of the largest private AI model companies and far above many other software names. Any slowdown in commercial momentum or compression in AI multiples more broadly could translate into significant volatility.
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