Mizuho Cautious on Valuation but Backs Palantir Technologies' (PLTR) Growth Outlook

Palantir Technologies Inc. (NASDAQ:PLTR) is among the best machine learning stocks to buy according to analysts. While the competitive positioning of Palantir’s AI-driven data analytics platforms has broadly been undisputed, the stock’s valuation has become the headline, often overshadowing the underlying fundamentals.

Following the company’s Q4 2025 results, Mizuho, which rates the stock Neutral, saw a “significant comp multiple compression” and thus lowered its price target to $195 from $205. Mizuho’s analysts characterized the company’s results as “fantastic”, but remained on the sidelines due to its “extreme” valuation at 40 times 2027 revenue, which they also referred to as “dramatically above anything else in software.” Further, on a more cautionary note, the analysts expect that, in the next few quarters, the stock could be “subject to meaningful multiple reversion”.

While valuation has been a concern, Mizuho believes Palantir Technologies Inc. (NASDAQ:PLTR) is “increasingly well-positioned to benefit from long-term trends in AI, government digital transformation, and industrial modernization.”

This constructive view, despite the firm’s Neutral rating, is driven by the company’s continued strong execution: it reported 70% year-over-year (YoY) revenue growth in Q4 and guided to 61% revenue growth and 56% free cash flow margin for FY 2026, substantially ahead of street expectations. The company also reported its ‘Rule of 40’ score, a Software-as-a-service (SaaS) industry-specific measure to gauge profitability, at a stellar 127%.

Palantir Technologies Inc. (NASDAQ:PLTR) is a software company that develops and deploys data integration and analytics platforms for government agencies, defense organizations, and enterprise clients. Its notable products include Palantir Gotham, Foundry, and Apollo. The company’s software uses machine learning to analyze complex data and support decision-making.

While we acknowledge the potential of PLTR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.