UBS Coverage of Palantir Technologies (NASDAQ:PLTR)

UBS initiated coverage of Palantir Technologies with a Neutral rating and an $80 price target in a research note on Thursday, citing strong fundamentals but challenging valuations.

Valuation Concerns

The stock is currently trading at 49x revenue and 124x free cash flow (FCF) based on 2025 estimates. UBS finds it difficult to recommend an immediate buy despite the company's impressive potential in the AI-data space.

> “The main thing keeping us on the sidelines is valuation, which at 49x revs and 124x FCF on 2025 estimates was simply tough to get over,” wrote UBS.

AI-Driven Growth

UBS analysts indicated that Palantir is well-positioned for AI-driven growth, referring to it as a “key AI-data winner.” Positive feedback from 17 large customers highlighted the value derived from the Foundry and AIP platforms, especially in supply chain optimization.

The trend of “DIY AI” supports Palantir’s capabilities, suggesting there is potential for expanding use cases beyond its current focus.

Revenue Projections

UBS projects a 28% revenue growth in 2025 and 25% in 2026, which exceeds Street consensus.

However, the stock’s valuation remains a significant hurdle for the analysts. UBS acknowledged that Palantir deserves a premium due to its involvement in transformative tech shifts like AI-data integration, but a 49x revenue multiple is considered steep. They prefer to “stay patient for a better entry point.”

Investor Interest

Despite these challenges, Palantir’s fundamentals have sparked substantial investor interest, with shares up 333% year-to-date and gaining traction among institutional investors. UBS believes the company’s strong margins and accelerating revenue growth warrant close monitoring.