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Analysts react to Palantir’s Q2: “Execution has been stunning”

But they’re still uncomfortable with the valuation.

8/5/25 9:58AM

Market leader and retail trader darling Palantir is on track for its best day since President Trump’s first TACO turn away from massive tariffs juiced the market on April 9.

The reason, of course, is the strong earnings numbers that the data analytics and AI software company reported Monday after the close. (TL;DR: They were great.)

Here are some highlights from the analyst notes we’ve been perusing this morning, which are largely laudatory, albeit with ongoing concern about the company's remarkably high valuation.

Bank of America (Rating: Buy | Price Target: $160 → $180):

“The ‘Rule of 40’ is a financial metric used to compare the sustainable performance of SaaS (Software as a Service) evaluating the right balance between growth and profitability. This rule suggests that strong SaaS should have a revenue growth rate that when added to the profit margin (usually EBITDA) exceeds 40%... Palantir has reached or exceeded this 40% mark over the last 5 years. Recent acceleration in topline growth — coupled with strong profitability — positions the company at unique 80%+ rule of 40 marks over the last three quarters.”

D.A. Davidson (Rating: Neutral | PT: $115 → $170):

“We believe Palantir is the best story in all of Software. We have raised our estimates and remain positive on the company overall. Palantir scores in the top decile of our coverage on Rule of X. The stock trades at ~103x CY25 revenue, an unprecedented premium to any peer, which is the only reason we maintain our NEUTRAL rating, while raising our price target to $170, from $115.”

Wedbush Securities (Rating: Outperform | PT: $160→ $200):

“We believe Palantir has a ‘golden path to become the next Oracle’ over the coming years and will grow into its valuation.”

Mizuho (Rating: Neutral | PT: $135 → $165):

“PLTR’s recent execution has been stunning, with material upward revisions across both Commercial and Government. That said, the stock’s multiple remains extreme, dramatically above anything else in software. While we continue to worry that the shares could suddenly be subject to material multiple reversion at some point over the next few quarters, PLTR’s uniqueness demands substantial credit. We believe PLTR is increasingly well-positioned to benefit from long-term trends in AI, government digital transformation, and industrial modernization. Reiterate Neutral and raise PT to $165 (from $135).”

Jefferies (Rating: Underperform | PT: $60):

“We commend the strong execution, but valuation at 74x CY26E rev is disconnected from even optimistic growth scenarios (55% 4-yr CAGR = 25x CY28E rev). Maintain Underperform.”

RBC (Rating: Underperform | PT: $40 → $45):

“Stepping back, the quarter and 2025 guidance were ahead of our expectations. However, with shares trading at 78x EV/CY26E revenue, well above peers, we view the risk-reward as negative, although we acknowledge a strong retail tailwind supporting the stock.”

Morgan Stanley (Rating: Equal-weight | PT: $98 → $155):

“The real insight software investors are after is why Palantir has been uniquely able to deliver such best-in-class results. It is increasingly clear that the recipe for such success lies in the company’s world class capabilities in: 1) software defined data integration/ingestion, 2) creating an ontology that allows AI models to have a true understanding of the underlying inter-relationships between data, transactions, employees and customers, 3) workflow automation and grounding state of the art models in enterprise data using the AIP platform and 4) bringing to bear highly technical engineers to help get customer’s complex use cases into production environments.”

Nia Warfield, Luke Kawa

US stocks grind higher as volatility dissipates

The S&P 500 rose 0.2% in what was is fourth-smallest intraday range of 2025, as did the Russell 2000, while the Nasdaq 100 gained 0.5%.

Matt Phillips

10h

Retail darling Planet Labs soars on earnings pop for second straight quarter

Planet Labs, which operates a network of satellites that record data, images, and information about the Earth, surged more than 40% after reporting better-than-expected quarterly numbers before the open of trading Monday.

It was the second straight quarter when the money-losing company’s quarterly update generated a massive market reaction. The stock jumped nearly 50% after numbers came out in June.

The company, which went public via SPAC in 2021, raised its full-year revenue guidance and notched its second straight quarter of positive free cash flow. Analysts and investors watch free cash flow closely as it can signal when a company’s business is starting to become more durable.

While the company is small — roughly $2.5 billion in market cap — it has posted pretty serious gains, rising almost 300% the past 12 months. Planet Labs also appears to have a fairly large retail shareholder base.

Just 57% of its float is in the the hands of institutional investors, according to FactSet data. That’s roughly the same as other retail favorites such as Palantir, though Planet Labs is no where near as highly valued as the defense data and AI software company led by CEO Alex Karp.

Planet Labs Boosts View as Deals Close Quicker on Higher Demand

Luke Kawa

11h

OpenAI’s cash burn suggests selling Nvidia because of reported Broadcom chip orders may not make much sense

When Broadcom announced that it booked $10 billion in new orders from a customer reported to be OpenAI, shares of their major AI chip rivals tanked.

The judgement of the Invisible Hand was that this was nearly a zero-sum outcome: $130 billion of market cap erased from Nvidia and Advanced Micro Devices, and a $135 billion increase in Broadcom’s market value.

But looking at this from the perspective of near-term cash flows, the market’s view seems off.

The Information is reporting that OpenAI now expects to burn through $115 billion by the end of 2029 (or more than 11 seasons’ worth of NFL broadcasting rights).

Let’s zoom in on this tidbit from The Information:

But the biggest change emerging from OpenAI’s latest projections was to its cash flows. The company projected it will burn more than $8 billion this year, or roughly $1.5 billion higher than its prior projection from earlier this year. Cash burn will more than double to more than $17 billion next year—$10 billion higher than what the company earlier projected

That $10 billion fits all too neatly with the $10 billion in orders from a major new customer that Broadcom CEO Hock Tan pointed to in the chip designer’s earnings call.

(Cheers to @lokoyacap for flagging this on X)

Assuming the reporting around OpenAI and Broadcom is accurate, these orders for ASICs don’t look to be displacing what the ChatGPT creator was going to spend on Nvidia’s GPUs, but are just in addition to it! The money’s not coming out of Jensen Huang’s pockets, it’s coming out of OpenAI’s coffers. Their spending budget is just getting bigger.

Perhaps if you squint, there’s a world in which OpenAI may prefer to have an additional $10 billion in Nvidia GPUs rather than ASICs, and I am still of the belief that hyperscalers diversifying their chip sources due to constrained top-end supplies isn’t a good sign for the company selling the most in-demand product.

But it’s quite intriguing, and says something about the depth of the pockets that fuel the AI boom, that OpenAI’s reported new relationship with Broadcom has seemingly no direct negative financial impact on Nvidia in the near term.

Luke Kawa

12h

Broadcom’s post-earnings romp continues on heavy volumes

As Broadcom enjoys a rush of new orders from a major new customer (reported to be OpenAI), it’s also reveling in a flood of traffic into the stock.

Volumes are running at 2.5 times their daily average through 1:20 p.m. ET as traders continue to bid up shares in response to the brighter outlook for 2026 revenues, which sent the stock up 9.4% on Friday.

The chip designer is basking in a flood of price target hikes from Wall Street, with Bank of America, JPMorgan, Argus Research, Citigroup, Bernstein, Deutsche Bank, Morgan Stanley, Barclays, Piper Sandler, Rosenblatt Securities, Wells Fargo, and Susquehanna upping their view on how high shares can go since the company reported earnings last week.

Separately, Taiwanese industry outlet DigiTimes is reporting that orders from several other leading tech companies for custom-made Broadcom chips (or ASICs) are “already in the pipeline.” This report has not been corroborated by our own or any other publication’s reporting to date.

Matt Phillips

13h

SpaceX spectrum deal sends would-be rivals lower

Shares of struggling satellite services company EchoStar soared Monday, after the company — which had recently tottered close to bankruptcy — announced the sale of some of its wireless spectrum licenses to Tesla CEO Elon Musk’s SpaceX for $17 million.

The sale provides a competitive advantage to Musk’s growing Starlink satellite services business, as the licenses it is acquiring from Echostar allows Starlink to operate ground based broadband and cellphone services, the Wall Street Journal reported.

Entities that stood to be hurt by the emergence of a Musk-led SpaceX Starlink service got hit hard on the news. AST SpaceMobile, which has plans to offer a similar satellite-to-consumer cellular service, tumbled.

So did wireless tower providers like Crown Castle and American Tower. Low cost cellular service provider T-Mobile, which had a deal with SpaceX, also slumped, as Luke noted earlier, along with other large wireless telecommunication services providers.

The wireless telecommunications industry grouping within the S&P 500 was down more than 2.5% shortly after noon, making it the worst performing industry within the S&P 500 on Monday.

SpaceX strikes $17B deal to buy EchoStar's spectrum for Starlink's direct-to-phone service | TechCrunch