Palantir Technologies Inc. (PLTR) stock intrinsic value fair value estimate & owner earnings analysis

Palantir sells software platforms that let governments and large companies bring their data together and run their operations on it. The platforms are Gotham, Foundry, Apollo and its Artificial Intelligence Platform (AIP). Revenue in 2025 was $4.48 billion, up 56%. Government customers brought in $2.40 billion (up 53%) and commercial customers $2.07 billion (up 60%). The United States supplied 74% of revenue. That includes about $1.9 billion from the U.S. government and $1.5 billion from U.S. commercial customers, more than double the $702 million a year earlier. The United Kingdom supplied 10%. The rest of the world supplied 16%, and that part grew only about 10%. How we measure earnings. We start from the cash the business generates from operations. We remove timing swings in receivables, deferred revenue and customer deposits. We count stock-based compensation as a real cost: $684 million in 2025, about 15% of revenue. We also deduct the capital spending needed to maintain the business, which is small for a software company. On that basis Palantir lost money every year from 2018 through 2022. It then earned $169 million in 2023 (7 cents a share), $483 million in 2024 (20 cents) and $1.59 billion in 2025 (62 cents). We start from the 2025 figure rather than a multi-year average. The earlier years describe a business less than two-thirds its current size, before the cost leverage that has since appeared: in 2025 operating expenses rose 14% while revenue rose 56%. Every period since has run above the 2025 level. In the first half of 2026 revenue was $3.57 billion, up 89% on the same half a year earlier. Owner earnings for that half were about $1.79 billion, more than in all of 2025. We adjusted for two things that flatter current earnings. First, Palantir pays almost no cash income tax. Its current tax expense was about $27 million on $1.66 billion of pre-tax income in 2025. That is because it carries about $9.0 billion of federal net operating losses and large tax deductions from employee stock awards. This shelter will run out, so every case assumes cash taxes rise toward the 21% federal rate. They begin rising in 2027 in the bear case, 2028 in the base case and 2029 in the bull case. Second, about $229 million of 2025 earnings was interest on the company's cash and securities. Those totaled about $9.4 billion at June 30, 2026, and the company has no borrowings against an undrawn $500 million credit line. Because that interest is already in earnings, we do not add the cash on top. Base case: $64.39 per share. Owner earnings for 2026 come to about $3.58 billion, which simply assumes the second half repeats the first. That is conservative, since second-quarter revenue was already 18.5% above the first quarter. It means per-share growth of about 125%, against 215% achieved in 2025. Growth then slows steadily: 50% in 2027, 35% in 2028, and down to 6% by 2035. Two facts support this path: - Contracted revenue that customers cannot cancel was $4.9 billion at June 30, 2026, up from $4.1 billion six months earlier and $1.7 billion at the end of 2024. - Existing customers keep expanding. The top twenty customers averaged $93.9 million of revenue in 2025, up 45%. After 2035, earnings hold flat for ten years because the platforms are built into how governments and companies operate. They then fade 5% a year as technology turns over. Bear case: $17.01 per share. It is built from risks the company itself discloses: - Many government and commercial contracts can be terminated for convenience. - The U.S. federal government cannot exercise contract options more than a year ahead. - The top twenty customers supply about 42% of revenue. - International revenue is growing slowly. In this case profit margins fall back to 2025 levels in the second half of 2026, giving about $3.05 billion for the year. Growth is 20% in 2027 and slows to 3% a year. Taxes arrive early, and earnings decline 8% a year after 2035. Bull case: $127.99 per share. The second half of 2026 continues the step-up seen from the first to the second quarter. Growth runs 65% in 2027 and eases to 8% by 2035. Taxes normalize later, and earnings hold flat after that because the platforms stay embedded with customers. The shares appear worth about $64 in the base case, but the range is very wide. Most of the value comes from earnings many years out, so the answer depends on how long rapid growth lasts. The margin-of-safety price is $25.00. That price reflects the large gap between the bear and base cases, the reliance on a small number of large contracts that can be cancelled, and the dependence on continued fast growth. What would make this wrong: - U.S. government budget cuts or contract options not being renewed. - Slower adoption by U.S. commercial customers. - Rising stock-based pay. It was $467 million in the first half of 2026, up from $315 million a year earlier. - Cash taxes arriving sooner than assumed. What we left out. The company reports $11.2 billion of remaining deal value, but most of it can be cancelled and the company says it has not historically collected all of such amounts, so we relied only on the non-cancelable figure. We also exclude revenue paid to Palantir in customers' securities ($37 million in 2025) because it produced no cash.