Palanti is completely misunderstood on Wall Street, and shares will rise, BofA said

In a note on Tuesday, the analysts noted that the 1980 estimate of the number of cell phone users by 2000 was only 900,000. The actual number of mobile subscriptions that year was over 100 million. Meanwhile, such early predictions also failed to see the emergence of mobile apps and smart devices.

“We see Palantir's (PLTR) capabilities, technology and path facing similar fundamental misunderstandings,” BofA analysts led by Mariana Perez Mora wrote. “The impending S&P 500 inclusion provides a watershed moment for institutional investors to revisit what they 'know' about PLTR.”

BofA reiterated its buy rating on Palantir stock and raised its price target from $30 to $50. The new target represents a 40.5% upside from the stock's closing price on Friday. And shares have already jumped last week on news that they will join the S&P 500 later this month and have more than doubled on the year.

A key misunderstanding on Wall Street is Palantir's unorthodox sales strategy, in which engineers have a key role. While investors say the approach limits scalability and profitability, Bofa disagrees.

“We think this approach makes PLTR solutions significantly more relevant to users and gives PLTR a stronger pricing power,” the note said. “Engineers build intimacy with the customer's mission and help shape the product to add real value.”

Meanwhile, as Palanti gathers more customers in the public and private sectors, BofA sees a huge opportunity for the company to become a common data operational system for the US government and large US businesses.

Palanti is known for its work in defense and intelligence but has also expanded into the commercial sector.

Celebrating Palantir's inclusion in the S&P 500, CEO Alex Karp was triumphant in a video posted Tuesday. He also addressed Wall Street's misconceptions about the company, which developed and offered products a decade ahead of rivals, allowing the entire enterprise to use AI and large language models.

“It's still radical to the point where people don't fully understand,” Karp said. “They don't understand how we've flipped a switch and moved to GAAP profitability. And grown-ups, professional managers and some analysts went from what they thought was a Frankenstein's monster run by a freak show leader—me—to a dynamic, clearly profitable company qualified and admitted to the S&P 500.”

Along the way, Palantir has charted its own course, ignoring what conventional wisdom preaches, he added, while praising retail investors who have kept faith in the company.

“All of you inside the company and around the world should celebrate that the Rebels won,” he said.