Palantir Technologies (PLTR +1.25%) stock has lost 30% of its value from its 52-week high that it hit in early November last year, when shares were trading at just over $200.
The stock's pullback in recent months is the result of an expensive valuation, as well as the recent sell-off in software stocks following artificial intelligence (AI) start-up Anthropic's launch of a new AI tool that reportedly poses a threat to traditional software companies. But will Palantir stock be able to overcome the recent weakness and reclaim the $200 milestone once again?
Let's find out.
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Palantir Technologies stock isn't cheap despite the pullback, but that's half the story
Palantir is trading at 218 times trailing earnings and 113 times forward earnings right now. Even the sales multiple of 79 is extremely expensive. So, it is easy to see why the stock has been under pressure in recent months despite reporting robust growth in both revenue and earnings.
NASDAQ: PLTR
Key Data Points
Palantir's revenue in the fourth quarter of 2025 increased 70% year over year to $1.4 billion. Its earnings increased by almost 80% year over year to $0.25 per share last quarter. Palantir believes that it can maintain its impressive growth in 2026 as well. The company has guided for a 60% increase in revenue this year to $7.2 billion.
However, it could easily do better than that. After all, Palantir ended 2025 with $8.6 billion in remaining deal value (RDV). The metric, which refers to the total value of Palantir's contracts yet to be fulfilled at the end of a quarter, increased by 91% from the year-ago period. So, Palantir's revenue pipeline grew much faster than its actual revenue, driven by the rapid adoption of its AI solutions.
Palantir's AI software platform enables customers to enhance productivity by fusing their data with generative AI tools. The productivity gains explain why Palantir's customers eventually sign larger contracts with the software specialist, leading to a robust increase in its revenue pipeline.
Additionally, more business from existing customers is good news for Palantir's margins, which explains the solid increase in its earnings last quarter. Not surprisingly, analysts are forecasting a 76% increase in Palantir's earnings in 2026, well above the 14% average earnings growth of the S&P 500. Again, don't be surprised to see Palantir cruise past Wall Street's expectations since its revenue backlog is big enough for the company to exceed its top-line guidance, potentially paving the way for a bigger increase in earnings.
The stock has the potential to touch $200, according to analysts
Investors looking to buy Palantir stock should consider looking past the valuation. The points discussed above clearly suggest that it has tremendous earnings power and the ability to sustain strong growth for years to come.
The AI software platforms market is poised to grow at a 38% annual rate through 2033, generating $251 billion in revenue at the end of the forecast period. Palantir is growing faster than this market, and it could keep doing so as its customer base continues to expand.
Moreover, a sustained period of potential earnings outperformance could help the stock regain its mojo. As such, don't be surprised to see this AI stock attain its 12-month price target of $196.50 sooner than expected before heading to $200, suggesting that it has the potential to deliver gains of around 40% in the coming year.
