RBC Capital has reiterated an Underperform rating on Palantir Technologies Inc. (NASDAQ:PLTR) and maintained a $50.00 price target as the data analytics company approaches its scheduled earnings report on February 2. That price target would place shares well below Palantir's current trading level of $167.47, even after the stock has returned 122% over the last 12 months.
The RBC research note highlights three themes that underpin the firm's cautious stance.
Government contracting metrics weakening
RBC's government data tracker shows a decline in qualified contract value (QCV) and in net new annual contract value (ACV). The firm nevertheless acknowledges that persistent geopolitical instability could bolster demand for Palantir's solutions over a longer horizon. These government-tracking signals come alongside Palantir's strong recent revenue performance - 47.23% growth over the past 12 months and a five-year revenue compound annual growth rate (CAGR) of 31% - indicating a mixed picture between top-line momentum and contract pipeline dynamics.
Questions around commercial business durability
RBC expresses skepticism about how durable Palantir's commercial momentum is likely to be. The firm reports that recent checks suggest some commercial customers are reassessing their relationship with Palantir or moving away from its solutions. RBC notes this concern despite Palantir's high profitability in the business - the company reported gross profit margins of 80.81%.
Self-reinforcing risk and downside skew
RBC also flags a "self-fulfilling prophecy risk" - the possibility that commercial momentum could continue in practice even if underlying durability is questioned. Despite that caveat, the firm concludes that Palantir's overall risk/reward profile is skewed to the downside. In the same note, RBC introduced its calendar year 2027 estimates for Palantir, extending its long-term analytical framework for the company.
Other analyst views and strategic developments
Palantir has attracted several other notable analyst actions and strategic updates recently. Phillip Securities initiated coverage with a Buy rating and a $208 price target, forecasting 47% year-over-year revenue growth to $4.2 billion by fiscal year 2025 and expecting commercial revenue to rise 51%, outpacing government revenue growth. Truist Securities also started coverage with a Buy rating and a $223 price target, pointing to Palantir's potential as generative AI adoption expands across governments and enterprises.
On the partnership front, Palantir expanded its strategic alliance with HD Hyundai in Korea, a move described as the company's largest partnership in the region. That collaboration is intended to broaden use of Palantir's Foundry and AI Platform across multiple HD Hyundai business units, including electric systems and robotics. Bank of America Securities reiterated a Buy rating and set a $255 price target, highlighting Palantir's AI momentum following investor meetings in South Korea.
These other analyst endorsements and the HD Hyundai partnership underscore competing narratives in the market: while some firms see rising AI-driven demand and accelerating commercial adoption, RBC points to measurable weakening in government contract indicators and signs of customer reassessment within the commercial base.
Implications for investors
RBC's note places emphasis on pipeline and contract-level metrics alongside profitability measures. The firm’s downgrade-anchored view rests on observable declines in QCV and net new ACV on the government side and on checks suggesting churn or pause behavior among commercial customers, even as Palantir posts noteworthy revenue growth and very high gross margins. The existence of competing Buy ratings and upgraded targets from other brokers indicates diverging interpretations of the company's growth trajectory and AI-related opportunities.
Key points
- RBC reiterated an Underperform rating and a $50.00 price target on Palantir ahead of its February 2 earnings, implying large downside from the current $167.47 share price.
- RBC's government tracker shows declines in qualified contract value (QCV) and net new annual contract value (ACV), though geopolitical instability could support longer-term government demand.
- Other firms initiated or reiterated Buy ratings with higher targets and forecasts, and Palantir expanded a major partnership with HD Hyundai in Korea to deploy Foundry and its AI Platform across industrial units.
Risks and uncertainties
- Weakening government contract metrics (QCV and net new ACV) could challenge public-sector revenue growth and affect government contracting and defense-related software demand.
- Durability risk in the commercial segment, where some customers are reportedly reassessing or leaving Palantir, could impact enterprise software and AI adoption curves among commercial clients.
- Conflicting analyst views create outcome uncertainty for investors as Buy-side forecasts and partnership announcements sit alongside RBC's downside-skewed assessment.
Conclusion
RBC's reaffirmation of an Underperform rating and $50 price target on Palantir underscores the firm's focus on contract-level indicators and customer durability, even as the company posts strong revenue growth and maintains elevated gross margins. Divergent analyst opinions and recent strategic partnerships highlight that the market is weighing both near-term pipeline signals and longer-term AI-driven opportunity. Investors will likely watch the February 2 earnings release closely for further clarity on contract trends and commercial momentum.