RBC Capital's Rating on Palantir#

RBC Capital has reiterated an Underperform rating on Palantir Technologies Inc. (NASDAQ:PLTR) as the company approaches its first-quarter 2026 earnings report. The firm has set a price target of $90.00 for the stock, which indicates a cautious outlook.

Valuation Concerns#

One of the main reasons for RBC Capital's rating is the company's valuation, which they consider unattractive. Currently, Palantir's stock trades at a price-to-earnings (P/E) ratio of 224.79. A P/E ratio is a measure that compares a company's current share price to its earnings per share, and a high ratio can suggest that a stock is overvalued compared to its actual worth. According to InvestingPro data, Palantir is among the most overvalued stocks in the market.

Declining Contract Values#

RBC Capital's analysis also highlights a decline in both quarterly contract value and net new annual contract value for Palantir, marking a second consecutive quarter of decrease. This trend is notable given the ongoing geopolitical instability, which typically drives demand for government contracts.

Concerns About Business Momentum#

The firm has expressed skepticism regarding the sustainability of Palantir's commercial business growth. Recent feedback indicates that some customers are re-evaluating their use of Palantir's platform, which raises questions about future revenue stability. RBC Capital believes that the risk/reward profile for investors is currently skewed to the downside.

Upcoming Earnings Report#

Despite these concerns, Palantir is set to release its first-quarter fiscal 2026 earnings report on May 4. Analysts from Wedbush, Baird, and Rosenblatt are anticipating strong results, with Wedbush projecting revenue of $1.54 billion, driven by the increasing adoption of Palantir’s Artificial Intelligence Platform. Additionally, Palantir has secured a significant $300 million contract with the U.S. Department of Agriculture, aimed at modernizing service delivery for farmers, which reflects the company's ongoing expansion in the government sector.