Palantir’s shares rise after Q4 results beat forecasts, with 61% revenue growth expected in 2026, exceeding FactSet’s consensus. The rule of 40 hit an all-time high at 127%. While the premium valuation remains a concern, Palantir’s growth potential seems promising compared to past innovators.

Trading at a 350% premium over AI firms, Palantir needs a 30% annual growth rate over 5 years to justify its valuation. Historical analysis suggests this growth is achievable, especially with the emergence of new categories like Palantir’s ontology framework.

Maintaining a narrow moat, Palantir’s fair value estimate is raised to USD 150 from USD 135 due to record growth guidance, lack of competitors, and increased US commercial adoption. Unlike other software stocks, Palantir stands out by appealing to enterprises seeking automation solutions.

Despite characterizing Europe as an AI laggard, Palantir’s management highlights strong American growth and interest from Arab states in AI defense solutions. The potential for market expansion and adoption of Palantir’s platform continue to drive optimism among investors.

Read more at Morningstar: Palantir Earnings: Another Quarter, Another Rule-of-40 Record; Valuation Fair Despite High Multiple