Can Palantir Sustain The AI-Fueled Business Growth That Sent its Stock 31% Higher?

Palantir Technologies (PLTR) shares soared 31% Tuesday after the company's fourth-quarter earnings beat expectations, driven by surging commercial demand for its artificial intelligence platform (AIP).

Several analysts raised their target price for Palantir reflecting the company's fourth-quarter success and growth potential in its AIP business segment, though some noted concerns about whether Palantir can sustain that momentum.

The company's shares gained $5.14 on Tuesday to finish at $21.86, after rising as high as $22.18 during the session. The stock has gained about 160% over the past year.

Bank of America analysts raised their price objective for Palantir to $24 from $21, with analysts writing that Palantir's AIP "is still in its infancy and already contributing in a meaningful way."

They said the AIP growth reported in the fourth quarter "is a sign of Palantir’s unique position as an enabler of AI-powered data-driven decision making in a tangible, accessible, and operational way."

Wedbush also lifted its price target to $30 from $25 to reflect the "off the charts commercial success Palantir is finding with AIP out of the gates."

Calling Palantir the "Messi of AI," Wedbush analysts said "a handful of times every decade there are tech companies that are so ahead of the competition and in a sweet spot of the future growth... yet the Street at the time dismisses it by dusting off their long term stubborn bear thesis."

They listed Palantir alongside mega-caps Nvidia (NVDA) and Microsoft (MSFT) as a company they believe fits that bill.

However, some analysts also raised some concerns about the sustainability of growth in AIP's business segment and company's valuation at large.

Jefferies upgraded Palantir to "hold" and raised its price target to $22 citing AIP "ramping faster than our initial expectations," but analysts noted that the firm "remain[s] on the sidelines given valuation concerns."

"Our biggest concern is if they can sustain the momentum after a seasonally strong F4Q," Jefferies analysts wrote, adding that "forward-looking indicators were consistently weak in the first three quarters (down >20%) and Government revenue continued to decelerate."