Palantir finds itself in an unfamiliar position today: It stock is trading 24% below our fair value estimate. During the past several years, the shares typically changed hands at a premium, often a steep one. But the market’s rotation away from many of artificial intelligence’s early highflyers has driven Palantir’s stock down more than 40% from its 2025 high. We see opportunity in the pullback. We think Palantir is a great company; the continuation of triple-digit growth and best-in-class customer retention is impressive. While AI labs’ attempts to copy Palantir’s deployment strategy could lead to increased competition, we’ve baked that risk into our $153 fair value estimate. Palantir was one of Morningstar Chief US Market Strategist Dave Sekera’s stocks to buy in a recent episode of The Morning Filter podcast.
Palantir began by solving military-related problems exclusively. However, it eventually realized that the problems being solved apply to any organization or company type, dramatically increasing its total addressable market. With the 2023 release of its Artificial Intelligence Platform, Palantir now provides a layer for large language models to help nontechnical users understand its work. Palantir’s core differentiator is its ontology framework, which uses data to uncover hidden relationships and enable advanced decision-making.
Key Morningstar Metrics for Palantir
- : $153Fair Value Estimate
- : 4 StarsStar Rating
- : NarrowEconomic Moat Rating
- : Very HighUncertainty Rating
Economic Moat Rating
We believe that Palantir has a narrow economic moat based on switching costs and intangible assets. Palantir differentiates itself as the only AI company with a framework that organizes disparate datasets and facilitates optimized decision-making. It creates a comprehensive, closed-loop system in which data flows from individual sources and data users. The company is deeply ingrained in diverse end markets and mission-critical customer infrastructure and has top-of-class net revenue retention metrics. Palantir drives efficiency gains from data, which accumulate and translate into switching costs for customers.
Read more about Palantir’s moat rating.
Fair Value Estimate for Palantir Stock
Our $153 fair value estimate implies a 2026 enterprise value/sales multiple of 48 times. We believe that we are in the early innings of an AI revolution; our base case has Palantir’s total addressable market growing to $1.4 trillion by 2033. We expect Palantir to drive efficiency among enterprises that now rely on large IT teams to interpret and present data to support decision-making. We forecast five-year average annual revenue growth of 45% for the company. We project gross margin to remain in the 83%-85% range over the next 10 years as we balance onboarding higher-margin enterprise customers with the potential for cloud costs to rise amid ever-increasing demand for computing resources.
Read more about Palantir’s fair value estimate.
Risk and Uncertainty
Palantir’s biggest uncertainty is the broad potential size of the total addressable market that its software can serve and the level of customer penetration it can achieve. If our bear case on market size comes to pass or a viable alternative emerges, the shares will likely prove worth far less than we expect. There is a chance that a technological juggernaut will develop software rivaling Palantir’s AI solutions. A new entrant encroaching on Palantir’s position would increase competition and diminish pricing power. Considering the sensitivity of the data that Palantir ingests, there is a privacy-related risk should a hack materialize.
Read more about Palantir’s risk and uncertainty.
Palantir Bulls Say
- Palantir’s premier AI software is positioned to capitalize on trends toward digitization, automation, and reindustrialization. We believe it maintains a strategic position in the AI value chain.
- Palantir’s software is useful to employees at all levels of a business to enhance efficiency.
- Palantir stands to disproportionately benefit from a Golden Dome-related spending boom and lacks a clear competitor.
Palantir Bears Say
- Palantir’s end markets are confined to entities that align with a Western ethos. This caps the total addressable market.
- The declining cost of AI inference and improvements in agentic large language models will lower barriers to entry in the AI decision-making software industry, which Palantir currently dominates.
- Palantir’s high valuation multiple leaves no margin for error in terms of execution. Any fears about the durability of growth will be met with sharp selloffs.
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This article was compiled by Susan Dziubinski and Sylvia Hauser. Data as of June 30, 2026, close unless otherwise noted.
