Palantir Stock Just Scored a Rare Upgrade Ahead of Earnings, Here’s Why

Palantir Technologies (PLTR) has emerged as a standout performer in 2025, with the artificial intelligence (AI)-powered software stock soaring 97% year-to-date and leading both the S&P 500 Index ($SPX) and Nasdaq-100 Index ($IUXX). The company's remarkable momentum is primarily driven by the widespread adoption of its Artificial Intelligence Platform (AIP) across government and commercial sectors.

Thanks to the stock’s lights-out performance, valuation concerns have emerged as a persistent concern for PLTR. The stock trades at a forward adjusted price/earnings (P/E) ratio of 255.32 and a price-to-sales ratio of 90.0 - significantly exceeding industry norms. These elevated multiples indicate that extremely high growth expectations are already priced into Palantir shares, and the company has very little room for error going forward.

Mizuho Upgrades PLTR Stock to ‘Neutral’

In a note today, Mizuho analysts led by Gregg Moskowitz acknowledged Palantir’s staggering valuation, even as they upgraded the AI stock to “Neutral” from “Underperform.” Mizuho is “stunned by the multiple that PLTR has attained, which places its valuation dramatically above anything else in software,” according to the analysts.

As a result, today’s upgrade was accompanied by a relatively tepid price-target increase to $135 from $116, which represents a discount to Palantir’s Tuesday closing price of $148.58.

Nevertheless, MIzuho is encouraged by Palantir’s “durable” public sector pipeline and its “growing commercial relevance,” with the analyst team arguing that PLTR “has a legitimate chance to accelerate revenue growth for a fifth consecutive quarter” in its fiscal Q2 earnings report, due out in August.

Inside Palantir’s 2025 Performance

Palantir demonstrated exceptional growth in Q1 2025, with revenue increasing 39% year-over-year to $884 million, highlighted by a dramatic 71% surge in U.S. commercial revenue to $255 million. The company's government segment remains robust, with U.S. government revenue growing 45% to $373 million, while total customer count has expanded 39% year-over-year to 769 clients.

Strategic developments have further strengthened Palantir's market position, including the expansion of its Maven Smart System contract with the Pentagon to over $1.3 billion through 2029. The company has also formed significant partnerships, including a collaboration with Accenture (ACN) Federal Services to deliver AI solutions to federal agencies.

Looking ahead, Palantir's Q2 earnings report, scheduled for Aug. 4, is expected to show continued strength. The consensus forecast from analysts calls for earnings per share of $0.08, representing a 167% increase from the previous year. Management has forecasted full-year revenue between $3.89-3.902 billion, indicating 36% growth.

What Does Wall Street Say About PLTR Stock?

Today’s Mizuho upgrade is a rare bullish note for PLTR. Wall Street maintains a cautious stance with a consensus "Hold" rating - although some analysts, like Wedbush's Dan Ives, see potential for the company to become “the next Oracle.”

The key question facing investors is whether Palantir's execution and expanding AI opportunities can justify its premium valuation, or if the stock is vulnerable to a correction after its dramatic rise. While the company's long-term prospects appear promising, particularly given its strategic positioning in AI and government contracts, the current valuation levels suggest significant risks for investors.