UBS has reaffirmed its neutral stance on Palantir Technologies (NASDAQ: PLTR), despite a strong year-to-date performance. The firm acknowledged the resilience in the company’s fundamentals but warned of potential headwinds from shifts in U.S. federal spending.
Analysts led by Karl Keirstead maintained a price target of $105, despite Palantir shares surging by around 43% this year, making it one of the best-performing software stocks. The firm attributed its cautious outlook to current macroeconomic uncertainty, leading them to closely monitor Palantir ahead of its upcoming Q1 earnings report, scheduled for May 5.
UBS recently interviewed six Palantir customers from the commercial and government sectors. The discussions revealed a positive outlook for Palantir, with enterprise adoption growing and customer sentiment remaining stable. However, UBS flagged delays in federal contract awards as a near-term risk for the company.
Commercial clients in the automotive, industrial, and manufacturing sectors described Palantir’s tools as essential to their operations, rather than optional. These clients highlighted key benefits, including improved operational efficiency, cost savings, and alignment with AI projects. Some clients also mentioned that Palantir’s solutions are helping them replace outdated technology stacks, such as data pipelines and visualization tools like Tableau. UBS views this as a potential growth opportunity for Palantir, particularly against competitors like Informatica (NYSE: INFA) and Salesforce (NYSE: CRM).
In contrast, the government sector, which makes up about 55% of Palantir’s total revenue, presents a more cautious outlook. UBS noted that delays in contract decisions are already materializing, and Palantir has warned that U.S. government spending may lean more heavily into the second half of 2025.
A major source of this uncertainty is the Department of Government Efficiency (DOGE), a Trump-era initiative focused on streamlining federal budgets. While DOGE has led to a $154 billion increase in federal spending compared to last year, it has also introduced cost-cutting measures, including layoffs of probationary staff and reductions in foreign aid. These moves could temporarily disrupt Palantir’s deal flow and impact future revenue from government contracts.
UBS analysts also emphasized that 75% of Palantir’s government-related revenue comes from U.S. agencies, making the company more vulnerable to shifts in domestic priorities. Still, they believe Palantir is well-positioned for long-term growth, thanks to its strong focus on AI and software as defense agencies shift away from traditional hardware-based solutions.
In light of these risks, UBS reduced its 2025 revenue growth estimate for Palantir by 200 basis points, aligning it with the company’s guidance of 31%.
Palantir Technologies (NASDAQ: PLTR) stock closed 4.64% higher at $112.78 on Friday.
Salman Akhtar is a finance, stocks, and technology journalist with years of experience across various news organizations. He has contributed his expertise to outlets such as 24NewsHD, TrimFeed, The Voice Pakistan, and TheTechBasic. Salman is passionate about making complex topics accessible to a broad audience. His dedication to delivering accurate and timely information has established him as a trusted voice in the industry. Read Full Bio
