Citi is officially joining the Palantir bull camp.
The bank upgraded Palantir $PLTR ( ▲ 1.08% ) to a buy on Monday after holding a neutral rating since February 2024, citing recent conversations with CIOs that suggest enterprise AI budgets and real-world use cases are accelerating faster than expected.
Citi’s view is that 2026 could set up another leg higher for Palantir’s growth, driven by both commercial momentum and government spending.
CIO Chatter Points to Bigger AI Spending
Citi said the upgrade is based on its expectation that 2026 will bring more positive estimate revisions as companies expand spending on AI adoption.
Analysts said recent CIO and industry conversations point to accelerating AI budgets, and Citi believes Palantir is positioned directly in that spending flow as a key vendor for data analytics and enterprise AI deployment.
Government Tailwinds Are Still a Major Engine
Palantir’s government and defense business remains a core pillar, and Citi pointed to “accelerating defense budgets” and modernization urgency as a key tailwind.
That matters because Palantir’s government segment has historically been sticky, long-term, and less sensitive to the normal boom-bust cycles of enterprise tech spending.
AIP and Foundry Drive the Commercial Narrative
At Citi’s recent IT software conference, the bank said participants highlighted the cost savings generated by Palantir’s AI Platform and noted survey data showing incremental increases in software budgets, especially for:
dedicated AI workloads
data projects getting reprioritized toward AI
Citi also said Palantir’s Foundry and AIP platforms position it as one of the most important vendors benefiting from the enterprise AI wave.
Earnings Next Month, Valuation Still the Elephant
Palantir is scheduled to report Q4 results on February 18, and that report is likely to be the next big reality check for the stock.
Because while Citi may be upgrading on fundamentals, the market has already priced Palantir like it’s the final boss of AI software.
Shares are up close to 1,000% over the last two years, pushing valuations to levels that are, in most analysts’ words, objectively insane.
Bottom line: Citi thinks Palantir $PLTR ( ▲ 1.08% )
has more growth tailwinds ahead, but the bigger question for investors is whether any of that upside is still available, or if the market already bought the future and then some.