Palantir Technologies (PLTR) Upgrade to Buy: Moat likely compounds into another step function change in TAM

We upgrade Palantir from Neutral to Buy, with a 12-month price target of $230 (18% upside). The two key debates we hear from investors at Palantir's current $8bn revenue run rate and ~100% growth rate are: 1) has the best part of Palantir's AI opportunity already been realized, or is the market deep enough for another set of higher estimate revisions? And 2) how sustainable is the FDE model? Our primary takeaway from our most recent set of industry conversations is that the stock is setting up for another phase of outperformance into 2027. On these two debates, we note that: 1) the TAM may be setting up for another step function change in depth, because of the shift to sovereign AI, bespoke applications, and Palantir's newer verticalization strategy; 2) the FDE model is more than simply hiring FDEs;