Goldman Sachs recently upgraded the stock from Neutral to Buy, setting a $230 price target. The brokerage sees further growth opportunities in customized AI applications and sovereign AI. Barclays is also bullish, with an Overweight rating and a $265 price target. However, the company’s forward non-GAAP P/E of 114.92x suggests investors are still paying a high price for its growth. I think the key question is whether the company can grow its earnings fast enough to justify that valuation.
Why I Remain Bullish on Palantir
I think Palantir has a strong opportunity to benefit as more businesses adopt AI. Goldman Sachs’ upgrade supports my view. In Q2, revenue rose 93% year-over-year to $1.94 billion, while the company also raised its full-year revenue growth outlook to 82%. Last quarter, Palantir also secured a record $2.13 billion in US commercial contract bookings, up 153% YoY. In my view, these results show demand for PLTR’s AI software is translating into stronger business performance, despite the recent pullback.
Cheaper on Earnings, Expensive on Sales
Palantir’s forward non-GAAP P/E of 114.92x is about 8% below its five-year average of 125.34x. Its forward P/S of 54.42x is 51% above its historical average of 36.16x. This suggests that while the stock is cheaper relative to its history, investors are still paying a premium for its sales. Analysts expect EPS to grow 115.83% in 2026 and 45.21% in 2027. This could support the valuation if Palantir meets those expectations.
The split between the two multiples is the interesting tension, 114.9x forward earnings is actually below the five year average while 54.4x sales is way above it, so the whole debate is really about how fast margins expand from here. The $2.13 billion of US commercial bookings growing 153% is the number I would anchor on, since bookings at that pace can pull the sales multiple down faster than peolpe expect. Do you think Goldman's $230 target is mostly a multiple call, or are they underwriting bookings growth staying above 100% into next year?