Citi Upgrades Palantir to Buy, Sees $235 on AI 'Supercycle'
Citigroup flips bullish on Palantir with a $235 price target, citing 51% government revenue growth and underappreciated AI demand.
Citigroup finally turned bullish on Palantir, and the price target is aggressive.
Analyst Tyler Radke upgraded Palantir to Buy/High-Risk from Neutral on Sunday, raising his target to $235 from $210. The call represents a major shift from one of Wall Street's more skeptical voices on the data analytics company.
Palantir shares rose 1.1% Monday on the upgrade, trading around $179. If Citi's target is hit, that's another 31% upside from current levels.
The Bull Case
Radke's thesis centers on what he calls a "valuation-fundamental disconnect."
Revenue estimates have been climbing since mid-2025, but the stock has traded sideways. That gap has created opportunity. Radke believes the market hasn't fully priced in the acceleration he expects for 2026—particularly in government contracts.
Citi now projects Palantir's fiscal 2026 government revenue could grow 51% year-over-year. That's 800 basis points above Street consensus. In an upside scenario, Radke sees total revenue growth reaching 70% to 80%.
Those are aggressive numbers for a company trading at Palantir's multiples. But Radke argues the AI investment cycle is entering a new phase that benefits Palantir disproportionately.
The Defense Super Cycle
Government spending on AI and defense technology is the key catalyst.
The Trump administration's $1.5 trillion defense budget proposal includes significant allocations for AI modernization. Palantir's existing relationships with the Pentagon and intelligence agencies position it to capture outsized share of that spending.
Radke specifically flagged the Golden Dome missile defense project as a potential catalyst. Palantir has been expanding its defense footprint, and major contract announcements could drive further estimate revisions.
"Besides a ramping defense super cycle, other possible tailwinds include lasting ramifications from the 2025 government shutdown and the modernization of U.S. allies," Radke wrote.
The Risk Label Matters
The "High-Risk" designation in Citi's rating isn't boilerplate. Palantir trades at roughly 60 times forward earnings, making it vulnerable to any deceleration in growth or multiple compression.
Bears argue the stock already prices in a best-case AI scenario. At current levels, Palantir needs to execute flawlessly while the broader AI spending cycle continues uninterrupted.
That's a lot to ask. But Citi's upgrade reflects a view that the AI supercycle is still accelerating, not peaking.
Other Recent Calls
Citi isn't alone in turning more constructive. Wedbush's Dan Ives named Palantir among his top picks for 2026, citing AI software demand. Multiple firms have raised targets in recent months as government contract wins exceeded expectations.
The consensus remains mixed—this is still a stock that draws both bulls and skeptics. But the direction of estimate revisions has been consistently higher.
Trading Setup
Palantir touched $182.50 following the upgrade before settling around $179. The stock has been range-bound between $170 and $185 since November.
A break above $185 would confirm the bullish thesis and potentially open a run toward Citi's target. Failure to hold $170 would suggest the multiple is compressing despite strong fundamentals.
For now, the momentum favors bulls. Institutional sentiment is shifting positive, and AI spending shows no signs of slowing.