UBS Loves This ‘AI Moat’ at Palantir. Why Analysts Still Think You Should Buy PLTR Stock

According to UBS Group (UBS) analysts, the “ontology layer” of Palantir's (PLTR) Foundry system, along with its ability to link “data to the customer’s relevant operations and systems,” protects it from competition. These attributes, in tandem with a huge deal that the company recently made with the Pentagon, should enable Palantir to continue growing very rapidly. 

However, in light of investors' continued worries about software companies and the still-stratospheric valuations of PLTR stock, the shares are unlikely to break out of their current range, at least until the firm reports its first-quarter financial results. PLTR is slated to announce its Q1 earnings on May 4. 

About PLTR Stock

Specializing in data analytics, Palantir developed an artificial intelligence platform (AIP) that enables organizations to easily utilize AI to draw conclusions based on their data. Based in Miami, Palantir has historically focused on helping governments analyze data.

Palantir's Q4 revenue jumped 70% to $1.4 billion, versus the same period a year earlier, while its net income attributable to common stockholders soared to $608.7 million in Q4 from $79 million in Q4 2024.

The company's market capitalization is $355 billion, and its forward price-to-earnings ratio is 143.62 times, while it is changing hands for 48.06 times its book value.

UBS' Note and PLTR's New Deal With the Department of Defense

Palantir's Foundry software has an “ontology layer (that) can be used for operational decision-making,” UBS wrote. Further, Foundry “is actionable and can quickly produce 'targeted outcomes' for business users,” the bank contended. Also importantly, the software excels at using data to draw conclusions related to the businesses of PLTR's customers, UBS asserted. According to the bank, which placed a $200 price target and a “Buy” rating on the shares, the company's customers do not see “any viable alternative to Palantir today.”

Palantir's competitors would likely disagree with UBS' assertions, and at least two of them would be able to back up their statements with relatively strong growth rates. In October, privately held Govini, which provides software to the federal government, reported that its annual recurring revenue had surpassed $100 million, while it was “growing faster than 100% in a three-year (compound annual growth rate).” CEO Tara Murphy Dougherty added that it can “keep growing for a long, long time.” 

Further, ServiceNow (NOW), which is viewed as a competitor with PLTR in the AI space, reported that its revenue in the fourth quarter of 2025 had climbed 20.5% versus the same period a year earlier, while its remaining performance obligations had jumped 26.5% year-over-year (YOY) to $28.2 billion. And the huge hyperscalers, which are competing with Palantir, could very well use their tremendous resources to develop software that is at least as capable as Foundry.  

Still, Palantir, whose revenue spiked a huge 70% YOY in Q4, may indeed have a sizable technological advantage over its rivals. 

And at the end of last month, the Department of Defense agreed to officially make Palantir's Maven “a program of record” and significantly increase the extent to which it's utilized by the huge agency. The decision is likely to generate a needle-moving amount of additional revenue for the firm and could lead to Maven being more intensively utilized by other agencies.

Given UBS' note and the Pentagon's decision, Palantir's top and bottom lines are likely to continue to grow rapidly, at least in the medium term. 

PLTR Stock Still Probably Won't Outperform the Market for at Least the Next Month

As noted in a previous column, “Some prognosticators have warned that Palantir's analytics business could be meaningfully hurt by the proliferation of AI tools.” This threat caused most software stocks to drop sharply starting late last year and subsequently trade in a range. Palantir has not been immune from this phenomenon, as the shares closed at $148.46 on April 2, well below their 52-week high of $207.52 last November. Additionally, since Jan. 21, the shares have changed hands in a fairly tight range of $130 to $170, and they are currently roughly in the middle of that range. 

Given the market's continued worries about software companies being supplanted by AI and PLTR's very high valuation, it's unlikely to break out of its range before it reports its Q1 earnings. And even if it does emerge from the range due to a rally by the stock market, PLTR probably won't gain more than the market.

The Bottom Line on PLTR stock

If Palantir's growth meaningfully accelerated in Q1, and those results handily beat analysts' average estimates, PLTR stock can rally significantly, break out of its range, and beat the market. Until the firm reports its Q1 results, however, its stock is unlikely to accomplish these feats. 

Moreover, in light of the formidable competition that the company faces, the high valuation of PLTR stock, and the elevated expectations for PLTR,  the odds of its Q1 results catapulting the shares higher are not that high. Finally, over the longer term, the company could be undermined by AI.