Citigroup argues that Palantir‘s valuation is “no problem.” The alternative view is that the whole problem lasts until Feb. 2.
Citi boosted its price target for Palantir from $210 to $235 and gave it a buy rating. Analysts said 2026 could bring more upward estimate revisions.
Others think the upgrade could come at the worst time for the trade, when expectations and valuations are already high, and when the upcoming earnings report is set up to punish anything less than a near-perfect future forecast.
Palantir will release its fourth-quarter and full-year 2025 results on Monday, Feb. 2, after the U.S. markets close. A webcast will follow at 5 p.m. EST.
Shares changed hands for about $170.96 lately, after going up and down between $182.12 and $170.03 in the last session.
And the options market is showing the importance of this print. The price is likely to move about 12.86% before the expiration date of Feb. 6 and about 14.74% before Feb. 20, Optionslam reveals.
A single update can flip the trade when the market is priced for perfection.
Photo by Scott Olson on Getty Images
The contrarian setup: “Good” for Palantir might not be good enough
Palantir has already illustrated the danger of Citi’s latest upgrade.
The data analytics giant outperformed expectations with its Q3 2025 report, but the stock still fell dramatically as investors thought about its value and “rally exhaustion.”
That’s why Citi’s call has a built-in pushback: If the market has already priced in a successful quarter and a strong 2026, the next move may depend less on what the company reports and more on whether Palantir’s forward indicators stay hot enough to warrant the multiple.
Citi is counting on Palantir’s growth
Citi’s optimistic thesis is based on the premise that Palantir’s growth and profitability are so good that traditional valuation measures matter less.
Analysts, in short, expect another year of estimated upgrades in 2026.
Market observers framed the call as a “supercycle” that was about to happen, even though Citi’s model showed that Palantir was trading at a very high multiple of anticipated enterprise value to future sales.
Palantir’s stock price already tells you what to do
Palantir bears don’t necessarily think its business is weak.
The stock’s price means that the corporation has to keep giving positive news, almost on a never-ending basis.
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- Palantir’s price-to-sales ratio is about 112x, and its forward P/E ratio is about 172x.
- Palantir’s EV-to-revenue is at 107.59.
The argument alters at those levels. The stock is no longer priced for “strong execution.” It costs more, since it can keep going faster and have higher profits.
If forward indicators cool even a little, multiples can drop quickly. The options market is already pricing in a move strong enough to represent that risk.
The Palantir “scorecard” for earnings that regular investors will use to trade
If the market is moving toward the Citi upgrade, the best way to tell if the premium multiple holds is to keep an eye on the data Palantir already report for the future.
Here are the most important factors, based on Palantir’s most recent quarterly report (Q3 2025).
Palantir’s conversion and demand
- Palantir’s sales were $1.181 billion, which is a 63% increase from the previous year.
- Its U.S. commercial revenue was $397 million, which is a 121% increase from the previous year.
- Palantir claims it made 204 deals worth at least $1 million, 53 of which were worth at least $10 million.
Pipeline of contracts
- Palantir said its total contract value reached an all-time high of $2.76 billion, a 151% increase from the previous year.
- It shared that its U.S. commercial TCV was $1.31 billion, which is a 342% increase from the previous year.
- Palantir indicated that the remaining deal value for U.S. businesses was $3.63 billion, which is up 199% from last year and 30% from the previous quarter.
Making money and having cash on hand
- Palantir’s adjusted operating income was $601 million, which is a 51% margin.
- Adjusted free cash flow was $540 million, which is a 46% margin.
- The defense tech giant boasted $6.4 billion in cash, cash equivalents, and short-term U.S. Treasury securities.
Anchor for guidance
- Palantir said sales would be between $1.327 billion and $1.331 billion in the fourth quarter of 2025.
Investors will look at those figures to see if Citi’s “rules don’t apply” position is still valid.
The contrarian tell to watch on Feb. 2 is not whether Palantir beats the consensus. It’s whether the momentum of TCV and RDV still makes it look like upside revisions are unavoidable, or whether the curve starts to flatten as comparisons grow harder.
Why things might get nasty, even if Palantir’s quarter is good
Palantir also has headline risk, which can make results more volatile. The company’s legal battle with former employees and the startup Percepta has gotten worse, CNBC reported. Percepta is fighting back in court, claiming that Palantir is trying to scare staff into staying.
Palantir also wanted a judge to prevent ex-Palantir employee Hirsh Jain from working at Percepta, or for its investor, for a year, Guru Focus reported.
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On a different note, when a stock is priced for perfection, insider-sale news can potentially hurt the stock’s image. A Form 144 filing shows that Palantir executive Ryan D. Taylor plans to sell 12,000 shares on or around Jan. 2, according to Investing.com.
Insider selling doesn’t always mean that the market is going down, but it might add to the story when the price is already a flash point.
What matters most for Palantir’s Feb. 2 earnings release
Palantir’s Feb. 2 earnings release could be viewed as a “two-part” event.
- Tone and guidance: The market is already ready for a reset, since options suggest a move of more than 10%.
- Forward indicators: Citi’s bullish stance is basically a bet that the pipeline will continue making analysts raise their numbers. That makes RDV, TCV, and big-deal counts the most important things to consider after earnings.
While Citi’s upgrade says Palantir’s valuation doesn’t matter, the options market and the multiples suggest that the value is exactly why the company’s next earnings report could be dangerous.