Palantir Technologies (NASDAQ: PLTR) enters its Q1 2026 earnings report on May 4 down approximately 30% from its November 2025 peak of $207.52 and roughly 20% below where it began the year, a combination of valuation compression, a high-profile short from Michael Burry, and competition anxiety driven by Anthropic’s surging revenues. What has not changed is the underlying growth trajectory, and that is why Morgan Stanley published a note on April 16 saying Palantir has the potential to “modestly accelerate growth and raise its full-year guidance” heading into quarterly results.
The bank maintained its equal-weight rating and $205 price target, which implies approximately 40% upside from Friday’s closing price of around $146. The framing was careful. Morgan Stanley has consistently noted that Palantir prices in years of flawless execution and that blockbuster quarters are now the baseline expectation rather than a positive surprise. Any shortfall in that expectation risks multiple contraction at a company trading at roughly 225 times trailing earnings.
The bull case starts with what Palantir actually delivered in Q4 2025: revenue of $1.41 billion growing 70% year-over-year, US commercial revenue surging 137%, and total contract value bookings rising 138% to $4.3 billion. That was the tenth consecutive quarter of accelerating revenue growth, a record that analyst Sanjit Singh at Morgan Stanley called “the fastest growth rate and highest margins perhaps in software history.” Full-year 2026 guidance targets approximately 61% revenue growth, implying a run rate approaching $7.2 billion, with adjusted free cash flow guided toward $4 billion.
The bear case is embodied by Burry, who posted on April 9 and then deleted a message claiming Anthropic is “eating Palantir’s lunch,” pointing to the AI lab’s surge in annual recurring revenue to approximately $30 billion as evidence that enterprise customers are gravitating toward cheaper, more accessible AI tools rather than Palantir’s deeply integrated and customised platform. The stock dropped 7% on the day. Cathie Wood’s ARK Investment subsequently bought the dip, and Trump publicly praised the company’s military AI capabilities. The two forces have essentially been cancelling each other out in price terms across the past two weeks.
The defence revenue story is structurally harder to dislodge. Palantir’s Maven Smart System is now an official Pentagon program of record, the kind of embedded status that converts government software budgets into near-permanent revenue lines rather than competitive tenders. The Iran war has elevated the visibility of AI-driven military analytics in exactly the way that benefits a company whose original reputation was built in the intelligence community. Trump’s endorsement of the company’s capabilities, whatever its motivation, reinforces that narrative with the administration that controls defence budgets.
Short interest and insider selling remain the two most visible contrary signals. Insiders sold $432.9 million in shares over the past three months. With the stock down substantially from its highs, those sales at progressively lower prices tell a story about management’s own view of the gap between the narrative and the valuation. Q1 EPS consensus sits at $0.26, against $0.25 delivered in Q4 2025. Revenue needs to extend the acceleration pattern that the past ten quarters have established. If it does, the upgrade conversation Morgan Stanley referenced becomes louder. If it misses, 225 times earnings is a very long way to fall.
