Goldman Sachs Upgrades Palantir, Citing Sovereign AI and Custom Software Demand

Key points

• Goldman Sachs analyst Gabriela Borges raised Palantir’s rating to Buy from Neutral with a $230 price target.
• Borges highlights 'sovereign AI' and custom software workflows as key growth drivers for Palantir.
• Palantir’s forward P/E is 91.1, significantly higher than the S&P 500’s 19.4, but earnings are projected to grow over 70% annually.
• D.A. Davidson also rates Palantir Buy with a $250 target, emphasizing its role as an AI control plane.
• Palantir’s U.S. commercial revenue grew 149% year-over-year in Q2 2026, reaching $764 million.

Background

Palantir has faced valuation concerns, with its forward P/E exceeding 200 times in late 2025. Recent AI market volatility, including a September 2026 selloff following calls to slow AI development, has affected tech stocks. Goldman Sachs has previously questioned AI revenue sustainability, as seen in its impact on Meta’s stock in September 2026.

How outlets are covering it

Goldman Sachs and D.A. Davidson both rate Palantir Buy, with price targets of $230 and $250, respectively. They emphasize custom AI and sovereign AI as growth drivers. Trefis notes competition from AI labs like OpenAI and Anthropic, but Palantir’s customer numbers and contract values remain strong. Barron’s highlights Palantir’s high valuation but rapid earnings growth, while Trefis points to potential risks if growth slows.

Why it matters

Palantir’s upgrade signals growing confidence in its ability to capitalize on demand for localized, custom AI solutions. Its strong commercial growth and high valuation reflect market optimism, but competition from AI labs and valuation concerns remain key risks for investors.

What to watch

Palantir’s Q3 2026 earnings, forecast at $2.16 billion to $2.164 billion, will be critical. Investors will watch for signs of slowing growth or increased competition from AI labs. The stock’s performance relative to its $230 target will also be a key indicator.