Palantir surges after ‘eye-popping quarter’ as Wall Street praises AI initiatives

Palantir Technologies (NYSE:PLTR) stock soared about 14% premarket on Tuesday after third quarter results and outlook beat estimates, drawing praise from Wall Street analysts.

Wedbush maintained its Outperform rating and raised the price target to $57 from $45 on the shares of Palantir, which provides software platforms for the intelligence community.

Analysts led by Daniel Ives said they raised the price target reflecting their increased confidence in the game-changing Artificial Intelligence Platform, or AIP, strategy with use cases for AI taking hold over the next 12 to 18 months.

“This was an eye-popping quarter for the Messi of AI growth story as AIP receives unprecedented demand as more enterprises realize the value of PLTR’s entire product suite with more AI use cases being brought to the table,” said Ives and his team.

The analysts noted total revenue came in at $725.5M, up 30% year-over-year and 7% quarter-over-quarter and well-above the Street’s $705.1M estimate, as U.S. commercial — which remains the star of the show — rose 54% year-over-year (versus Street at 47%) with accelerating demand for AIP steering new customer conversions and existing deal expansions.

Revenue from the company’s largest customers continued to expand, with revenue from its top 20 customers increasing 12% year-over-year to $60M per customer, Wedbush noted.

Palantir raised it For full year 2024 outlook across the board, as the company continues to “win share in this massive land grab opportunity for enterprise AI solutions,” the analysts noted.

Total revenue is forecast to be between nearly $2.805 and $2.809B (midpoint at $2.807B) with U.S. Commercial expected to grow over 50% for the year (compared to prior guidance of over 47%) as AIP continues to driver new customer conversions and existing customer expansions, according to the analysts.

Meanwhile, Morgan Stanley has removed its rating and price target on Palantir following the results. The firm previously had an Underweight rating and $20 price target on the shares.

Analyst Keith Weiss and his team noted that their Underweight thesis was predicated on maturing government growth, lagging commercial traction, and limited free cash flow, or FCF, revision potential ahead. However, the trend lines extending into this quarter prove stronger than expected, and highlight the company’s AI positioning.

The analysts said that Palantir’s results have refuted their concerns as revenue growth accelerated for the fifth consecutive quarter in a row to over 30% year-over-year. Strength was seen across the business with the Government business accelerating to +33% year-over-year (from +23% year-over-year increase in Q2), bolstered by 40% year-over-year growth in the U.S. Government business.

The company has marched toward a rare rule of 68 profile with revenue growth of 30% year-over-year seemingly more sustainable and operating margins of 38%, the analysts added.

Weiss and his team said that the trend lines in these metrics have been building for a few quarters indicating that Palantir is emerging as a platform of choice in this stage of the generative AI cycle.

While shares trading near 30 times 2026 revenue suggests risk/reward may be unbalanced, the trend lines of improving top- and bottom-line fundamentals force the analysts to reassess their Underweight rating. Thus, they have removed their price target and rating and would re-evaluate their thesis, rating and price target, Weiss and his team noted.

Related tech stocks: Synopsys (SNPS) IBM (IBM), Cadence Design Systems (CDNS), Cisco (CSCO), owner of Splunk, Autodesk (ADSK), Workday (WDAY) and Roper Technologies (ROP) were largely flat premarket on Tuesday.