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Palantir (NASDAQ:PLTR) was initiated with a Neutral rating by Baird as the financial services firm is impressed with its artificial intelligence-powered offerings and revenue growth but remains wary of its high valuation.
Palantir shares have surged more than 300% year to date as the software company has expanded from government contracts to capturing a larger share of commercial revenue as well.
“Its AIP platform, launched in 2023, has catalyzed U.S. Commercial growth, which surged 54.3% YOY in Q3, accelerating total revenue growth to 30%,” said Baird analyst William Power, in an investor note. “PLTR has excelled at actually putting generative AI applications into production, which is where we expect most value to be extracted in the coming years.”
Baird set a $70 price target on the stock.
U.S. government agencies continue to provide a strong base for Palantir as it has increased nearly 40% year over year to account for 44% of total revenue. With an incoming administration focused on government efficiency, Baird believes Palantir could be a “force multiplier” in that department.
“PLTR is currently trading at 48x our 2025 revenue forecast, the high end of software,” Power said. “PLTR has gained 313% YTD vs. the S&P 500 at 27%, suggesting high expectations, though we also acknowledge the strong, accelerating operating momentum.”
Baird forecast Palantir’s full-year revenue increasing 26% and another 24% in 2025 to reach $3.5B.