Palantir Technologies (NASDAQ: PLTR) may be one of the most polarizing stocks in the market today. Though it’s one of the most prominent artificial intelligence (AI) software businesses, analyst sentiment toward it remains surprisingly mixed. Out of the 28 analysts covering the stock, 17 rate it a buy, nine a hold, and two a sell.
While this does not indicate outright pessimism, it shows that a meaningful number of Wall Street analysts remain unconvinced that the stock has upside potential despite the company’s exceptional business momentum. This disconnect between sentiment and fundamentals is exactly what makes the stock interesting today.
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The biggest concern about Palantir among investors is its extremely steep valuation. The company trades at over 82 times forward 1-year earnings, which is expensive even for a high-growth company. That alone has made many analysts cautious, limiting their upgrades despite the business’ improving performance.
But the concerns go beyond that. Palantir’s expanding role in handling sensitive government and financial data is also drawing scrutiny. A recent United Kingdom contract giving the company access to highly sensitive financial regulatory data has sparked privacy and ethical concerns.
Palantir also does not behave like a typical software-as-a-service (SaaS) company. Instead, its revenue is driven by large and complex contracts with government and commercial organizations. Hence, analysts find it difficult to accurately model its future revenues.
Palantir, however, is demonstrating exceptional business momentum. The company’s top line grew by 70% year over year in the fourth quarter, its fastest growth as a public company. This growth is not coming at the cost of profitability. In the fourth quarter, Palantir reported a GAAP net income margin of 43%. In 2025, it generated over $2.2 billion in adjusted free cash flow.
It closed deals with a total contract value of $4.3 billion in the fourth quarter. The company also exited the quarter with $4.2 billion of remaining performance obligations (a measure of contracted backlog), up 144% year over year. These numbers highlight the robust demand trends for the company’s platform. The company’s net dollar retention was 139%, highlighting the increasing use of its platform by its established customers.