Baird upgrades Palantir: Revenue and FCF 'too impressive'

Investing.com -- Baird upgraded Palantir to Outperform in a note on Wednesday following the company’s latest quarterly results, citing accelerating revenue growth, rapidly expanding free cash flow and what the firm now views as a more compelling valuation backdrop.

Baird analyst William Power said Palantir delivered “the tenth consecutive quarter of accelerating total revenue growth (+70% vs. +63% in Q3), driven by U.S. commercial upside.”

He added: “The free cash flow inflection, and arguably attractive (not a typo) FCF multiple on 2027 upside scenarios, pushes us into the ‘buy’ camp.”

Power said the firm believes investors may shift toward evaluating Palantir on free cash flow rather than revenue multiples, noting that “the exploding FCF aids the valuation argument, which could change the institutional investment narrative.”

Baird raised its 2027 free cash flow forecast from $4 billion to almost $6 billion, calling “$7-8 billion a reasonable upside scenario.”

The firm added that valuation concerns have eased, writing that “the stock is trading at just ~50-60x that $7-8b range, which we believe is actually quite reasonable for a company currently growing revenue 70%+ at scale (and accelerating).”

Baird also pointed to growing visibility, with remaining performance obligations up 144 percent year over year, and highlighted significant expansion potential in U.S. commercial markets. The firm reiterated that Palantir is “one of the biggest winners in AI.”

Baird lifted its 2026 revenue and free cash flow estimates to $7.19 billion and $4.0 billion, respectively.

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