Palantir Technologies Inc.’s shares experienced a significant decline of nearly 10% on Wednesday morning, notwithstanding an upgrade from HSBC. The financial giant recently elevated its rating on Palantir from “Hold” to “Buy” and increased the price target to $205, up from a previous target of $197.
HSBC analyst Stephen Bersey pointed to the anticipated growth in Palantir’s U.S. commercial segment, forecasting a remarkable compound annual growth rate of 58.8% from 2025 through 2029. Bersey expects the segment to reach a revenue milestone of $9.3 billion by 2029. Notably, he highlighted Palantir’s robust performance in the fourth quarter of 2025, where the company reported a remarkable 137% year-on-year revenue increase, amounting to $507 million. This growth trajectory was also evident in the third quarter of 2025, where revenue was up 122%. In terms of new agreements, Palantir’s total contract value rose to $1.344 billion in 4Q25, slightly up from $1.310 billion in 3Q25.
Despite the optimistic performance metrics presented in Bersey’s report, he also offered a note of caution regarding the return on invested capital for some of Palantir’s internal AI initiatives, suggesting that disappointing results in this area could potentially dampen the pace of future contract signings. This mixed message seems to have overshadowed the company’s solid growth results, resulting in a decline in share prices as investors responded more critically to the cautious outlook.
Market observers are now likely to keep a close eye on Palantir’s forthcoming sales figures and contract disclosures in the hopes of finding evidence of sustainable commercial growth. Additionally, analysts and investors eagerly await the company’s next quarterly update and guidance to better gauge its future performance trajectory.
