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On Tuesday, Goldman Sachs updated its outlook on Palantir Technologies Inc . (NASDAQ:PLTR), increasing the price target to $90 from the previous $80 while maintaining a Neutral rating on the stock. According to InvestingPro data, the stock is trading near its 52-week high of $125.41, having delivered an impressive 390.96% return over the past year. The firm’s analysts acknowledge Palantir’s potential for sustained top-tier growth, driven by the ongoing shift towards enterprise artificial intelligence (AI) adoption, an emphasis on efficiency and technology uptake within the U.S. government, and the implementation of Operation Warp Speed by new defense companies, established defense contractors, and the broader manufacturing sector.
Goldman Sachs’ assessment reflects confidence in Palantir’s strategic positioning to capitalize on these key industry trends, supported by the company’s robust 28.79% revenue growth and industry-leading gross margin of 80.25%. However, the firm also cautions investors about potential long-term ecosystem risks, including a shift from customized solutions to more standardized, off-the-shelf products, which could impact Palantir’s market standing.
The valuation of Palantir shares is another point of consideration in Goldman Sachs’ analysis. The company is currently trading at an enterprise value to sales to growth (EV/Sales/growth) multiple of 2.2x, an EV/sales multiple of 81x, and an EV/Sales to "Rule of 40" ratio of 0.97x. These metrics are contrasted with other software companies experiencing growth of over 20%, which typically trade at multiples of 0.5x, 12x, and 0.28x respectively.
Goldman Sachs’ neutral stance suggests that while they see positive growth prospects for Palantir, they also recognize the premium valuation of the stock compared to its peers. The updated price target of $90 reflects a balance between the company’s strong growth trajectory and the risks associated with its market position and valuation. InvestingPro analysis indicates the stock is currently overvalued, with additional insights available in the comprehensive Pro Research Report, which provides deep-dive analysis of 1,400+ top US stocks. Discover more valuation metrics and 18 additional ProTips for PLTR with an InvestingPro subscription.
In other recent news, Palantir Technologies Inc. has reported a strong start to 2025, showcasing impressive financial results. The company announced a 39% year-over-year increase in revenue for the first quarter, reaching $884 million, and met its earnings per share (EPS) forecast of $0.13. Palantir has also raised its full-year revenue guidance to a midpoint of $3.895 billion, surpassing Wall Street’s expectations. Additionally, the U.S. commercial revenue grew by 71%, contributing significantly to the overall performance.
Analyst firms have responded with varying outlooks; Raymond (NSE:RYMD) James reaffirmed a Market Perform rating, while Mizuho (NYSE:MFG) Securities raised its price target for Palantir from $80 to $94 but maintained an Underperform rating due to valuation concerns. Palantir’s management has highlighted the company’s focus on AI and enterprise autonomy as key drivers of growth, particularly in the U.S. market. The company has also seen a substantial increase in U.S. commercial Total (EPA:TTEF) Contract Value (TCV), closing $810 million, which is up 239% year-over-year. Despite these positive developments, Palantir’s stock experienced a decline in after-hours trading, reflecting investor caution about future growth prospects.
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