Deutsche Bank Upgrades Palantir to Buy, $200 PT
Deutsche Bank analyst Brad Zelnick upgraded Palantir (NASDAQ: PLTR) from Hold to Buy with a price target of $200.
“Palantir’s 2Q results were exceptional even by the company’s own increasingly anomalous standard.
The quarter further reinforces our view that Palantir is operating several steps ahead of the rest of Software in converting AI demand into real customer value.
As much of application software is still trying to prove AI is truly incremental, Palantir increasingly looks like a time traveler, having already arrived in the AI future others are still aspiring towards.
With an even-more-reasonable valuation following another substantial beat and raise, we are upgrading our rating to Buy from Hold while maintaining our $200 TP.
Palantir is a company that in our view deserves to trade at a premium, yet its current valuation understates its unparalleled Rule of 155 profile and durable AI platform opportunity.
Revenue growth accelerated 8pts to +93% y/y (vs. a 9pt tougher compare), with strength once again driven by U.S. Commercial, where revenue accelerated 16pts to an otherworldly +149% y/y and +28% q/q.
Results were supported by record U.S. Commercial TCV of $2.132bn, up +153% y/y, while U.S. Commercial RDV grew +124% y/y and +27% q/q to $6.238bn.
Importantly, the quarter showcased Palantir’s Sovereign AI capabilities, which we believe are increasingly resonating as customers realize that AI value generation is not simply about consuming more tokens, but about converting those tokens into governed, measurable outcomes.
Management framed AIP as the environment where customers can build, deploy, evaluate, and continuously improve AI workflows inside their own security boundary, and we are very intrigued by tools like AIP Evolve helping optimize model selection, further differentiating Palantir as a partner to enterprise customers.
AIP appears to be emerging as the control plane for enterprises that want to use the best available models without giving away the proprietary data, prompts, and workflows that create their competitive advantage.
This “own your alpha” message is important, in our view, because it extends Palantir’s differentiation into AI governance, an important emerging area where traditional approaches may prove insufficient.
We believe the company’s financial profile is further separating from the broader Software group and should command a premium valuation, closer to quality growth software peers trading at ~2.2x EV/uFCF/G.
With shares trading at ~1.5x our FY27E EV/uFCF/G (or even more attractively at 1.0x considering our bull case scenario), risk/reward skews favorably and supports our Buy rating and DCF-derived $200 TP.”
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