Deutsche Bank Lifts Palantir Target to $200, But Cautions on 'Rich' Valuation
Analyst Raises Bar for AI Data Giant, But Questions Timing for New Investors
In a move highlighting the heated debate around artificial intelligence valuations, Deutsche Bank analyst Brad Zelnick has increased the firm's price target on Palantir Technologies (NYSE: PLTR) to $200 from $160. The revision, issued February 3rd, underscores the bank's growing optimism about the company's fundamentals and its position as a core AI infrastructure player. However, the maintained "Hold" rating signals ongoing wariness about the stock's premium pricing, particularly when accounting for employee stock awards.
"We admire the company's strategic positioning and execution," the note stated, acknowledging Palantir's leading role in government and commercial AI platforms. "This bias is reflected in our increased target. Yet, at current levels, valuation remains difficult to justify as the market intensifies its scrutiny of software companies' stock-based compensation (SBC)."
The analysis presents a dual picture. On a 2027 estimate basis, the stock appears more attractive at approximately 70 times enterprise value to unlevered free cash flow. However, when SBC is factored in, that multiple expands to around 93 times. This gap explains Deutsche Bank's preference for a "better entry point" for investors not already holding shares.
Deutsche Bank also noted Palantir's formidable cash position, which has grown to $7.2 billion, contrasting it with a relatively modest $75 million share repurchase plan announced for 2025. This substantial war chest positions the company for further strategic investments or acquisitions in the competitive AI landscape.
The report arrives amid heightened investor focus on AI stocks, with Palantir frequently cited as a primary beneficiary of increased government and corporate spending on data analytics and machine learning systems.
Market Voices: A Split Decision on Palantir's Price Tag
Eleanor Vance, Portfolio Manager at Clearwater Capital: "The target hike validates the long-term thesis. Palantir's Gotham and Foundry platforms are becoming essential operating systems for data-driven decision-making. The cash pile is a huge strategic advantage. Valuation metrics for category-defining AI companies need a new framework."
Marcus Thorne, Independent Market Analyst: "This is classic Wall Street doublespeak. 'We love it, but don't buy it.' A $40 target jump alongside a 'Hold' tells you everything about the pressure to stay bullish on AI while quietly acknowledging the bubble-like premiums. At 93x adjusted cash flow? It's sheer madness detached from fundamental risk assessment."
Dr. Anika Sharma, Tech Sector Economist at Stratford Institute: "The key takeaway is the focus on SBC. As rates stayed higher for longer, investors are no longer ignoring dilution. Palantir's challenge is to transition its compensation model to align with mature, cash-generative enterprises, which would significantly re-rate the stock."
Disclaimer: This analysis is based on publicly available information and analyst reports. It is not financial advice.