UBS has raised its rating on Palantir Technologies Inc. (PLTR) to ‘buy’ from ‘neutral’, citing accelerating demand in artificial intelligence and data spending as key growth drivers for the software analytics company. The upgrade, announced in a February 27 report, reflects growing confidence in Palantir’s strategic positioning amid a broader industry shift toward AI and data-centric solutions.

Analyst Sees Strong Revenue Growth Potential

Karl Keirstead, an analyst at UBS, maintained his price target of $180 for Palantir shares, suggesting a potential 32% increase from its closing price of $135.94 on Thursday. According to Keirstead, investors should take advantage of the 35% decline from the stock’s peak, which he describes as a prime opportunity to invest in a ‘premier growth story in software.’

Keirstead emphasized that Palantir is uniquely positioned at the intersection of two powerful spending trends: artificial intelligence and data infrastructure. ‘Accelerating growth stocks tend to work over time, and Palantir deserves a material multiple premium given its leading position in three key growth areas — AI, data and modern defense tech,’ he wrote in the report.

Valuation Metrics Support Buy Rating

Currently, Palantir shares trade at around 50 times Keirstead’s estimates for the company’s free cash flow in 2027. He anticipates revenue growth of 70% in 2026, with stable mid-50% margins, which he argues make the stock very attractive at its current level. ‘Many investors can make a strong valuation case for the stock,’ he said.

Keirstead attributed this projected growth to ‘exceptional’ demand for Palantir’s services, which he believes will continue to rise as AI models and data infrastructure investments accelerate. ‘Our latest checks support a view that Palantir is facing a very strong demand backdrop as it sits at the intersection of AI and data spend,’ he wrote.

In one of his interactions with partners, Keirstead noted that a key stakeholder said, ‘demand is exceptional.’ This sentiment highlights the broader industry trend of increased spending on AI and data analytics, areas in which Palantir has carved out a leading position.

Market Performance and Future Outlook

Despite the positive analyst outlook, Palantir’s shares have declined by 24% this year. However, they remain 60% higher compared to their level 12 months ago. Keirstead believes that investors are likely to return to ‘AI winner’ stocks like Palantir in 2026, as the company continues to benefit from the growing AI and data spending boom.

The report highlights that Palantir’s business model is well-aligned with the current technological and strategic priorities of both private and public sector clients. As AI becomes more integrated into decision-making processes, the demand for advanced data analytics tools is expected to grow significantly.

With UBS’ upgrade and the positive analyst commentary, Palantir may see increased interest from investors looking to capitalize on the AI and data analytics growth story. The company’s ability to meet this demand will be critical in determining whether its stock continues its upward trajectory in the coming months.