HSBC has re-rated Palantir Technologies Inc. (NASDAQ: PLTR), moving its recommendation from Hold to Buy and increasing its price target to $205 from $197 after the company reported an outsized fourth-quarter performance.
Palantir posted revenue of $1,407 million for the quarter, a 70% increase versus the prior year. That top-line figure topped HSBCs internal forecast of $1,342 million and the broader consensus of $1,340 million.
On the profitability front, the company reported non-GAAP operating profit of $798 million, up 114% year-over-year and roughly 13-14% ahead of analyst expectations. Non-GAAP operating margin expanded to 56.8%, an 11.7 percentage-point improvement year-over-year. Non-GAAP earnings per share rose 84.9% to $0.25, beating estimates by $0.02.
Management also provided forward-looking non-GAAP operating profit guidance for 2026 of $4,134 million, a number materially above the pre-results consensus of $3,127 million.
Reflecting the stronger results and guidance, HSBC adjusted its 2026 forecast for Palantirs revenue to $7,527 million, implying a 68.2% year-over-year increase, and increased its estimate for 2026 non-GAAP operating profit to $4,483 million.
The bank highlighted the U.S. commercial business as a particularly strong area: that segment grew 137% year-over-year to $507 million in the fourth quarter of 2025. In addition, total contract value of new agreements reached $1,344 million in the fourth quarter of 2025, up from $1,310 million in the prior quarter, which HSBC views as evidence of potential upside to Palantirs revenue run-rate even as it flagged some industry-level concerns about return on investment for enterprise AI projects.
Other brokerages offered a variety of takes following the quarterly figures. Truist Securities reiterated a Buy rating and described Palantir as an "AI pure-play victor," noting that revenue growth accelerated for the tenth consecutive quarter and that annual revenue scale has surpassed $4 billion.
UBS responded by trimming its price target to $180 while retaining a Neutral rating. Cantor Fitzgerald also kept a Neutral view, with a $198 price target; the firm acknowledged that Palantirs fourth-quarter results exceeded expectations, with a 5% overall beat and a 6% beat in U.S. commercial revenue. DA Davidson set a $180 price target, citing robust U.S. demand for AI solutions as a key driver of growth. Piper Sandler moved in the opposite direction on valuation, raising its price target to $230 and pointing to the companys 70% revenue growth and 57% EBIT margins as justification.
Collectively, the analyst responses reflect a range of interpretations about Palantirs trajectory: some firms are upgrading or affirming Buy views, while others are more cautious, trimming targets or remaining Neutral despite the beat-and-raise quarter.
Summary - HSBC upgraded Palantir to Buy and lifted its price target to $205 after the company reported $1,407 million in fourth-quarter revenue (70% year-over-year), $798 million in non-GAAP operating profit (114% year-over-year), a 56.8% non-GAAP operating margin, and non-GAAP EPS of $0.25. Management gave 2026 non-GAAP operating profit guidance of $4,134 million, well above the pre-results consensus.
Key points
- Revenue growth and margin expansion: Palantir delivered 70% top-line growth with operating margin improving by 11.7 percentage points year-over-year - impacts technology and enterprise software sectors.
- Upward guidance and HSBC revisions: Managements 2026 non-GAAP operating profit guidance and HSBCs raised 2026 revenue and profit forecasts point to stronger expected profitability - relevant to investors and equity markets.
- Uneven analyst reactions: While some brokers reinforced Buy views, others maintained Neutral stances or cut price targets, showing divergent views on valuation and sustainability - affecting sell-side coverage and investor sentiment.
Risks and uncertainties
- Return-on-investment concerns for enterprise AI projects: HSBC noted industry worries about ROI for enterprise AI deployments - a risk to sustained revenue growth in enterprise software and technology spending.
- Differing analyst valuations and outlooks: Mixed price-target adjustments and ratings across brokerages indicate uncertainty over Palantirs long-term valuation and margin sustainability - a market and equity-research risk.
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