Palantir-Nebius Deal Doesn’t Solve Either Stock’s Biggest Problem
A concept image for a killer AI robot by freshidea via Adobe Stock Palantir Technologies (PLTR) and Nebius Group (NBIS) have joined forces in a partnership that directly supports both companies’ growth stories. Palantir gets a compute partner that can support its push into sovereign AI, while Nebius gains access to a prominent enterprise distribution…
A concept image for a killer AI robot by freshidea via Adobe Stock
Palantir Technologies (PLTR) and Nebius Group (NBIS) have joined forces in a partnership that directly supports both companies’ growth stories. Palantir gets a compute partner that can support its push into sovereign AI, while Nebius gains access to a prominent enterprise distribution channel through Palantir. That makes the deal appear straightforward and mutually beneficial on paper. Still, both stocks face growing investor skepticism. Palantir’s valuation remains a major point of debate among investors, and Nebius still needs to show that its capital-heavy build-out will eventually lead to durable profitability.
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Bringing Sovereign AI Inside Palantir’s Perimeter
Palantir has designated Nebius as its preferred sovereign AI infrastructure partner. The company plans to integrate Nebius’ compute and inference endpoints into the Palantir enterprise perimeter following an integration period. The partnership will allow eligible Palantir customers to use Nebius’ infrastructure while maintaining control over their own compute, models, and data. The companies will also collaborate to expand compute capacity more quickly, including through modular data center builds at sites with available power.
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Two Bull Cases, Two Unresolved Risks
Michael Burry has once again taken a bearish position on Palantir, citing concerns about the company’s valuation and accounting just days ago. The stock still trades at a forward P/E above 100x, nearly four times the sector median, despite its strong growth. At the same time, analysts are also expecting a moderation in Palantir’s growth rate going forward. Nebius also remains heavily dependent on capital spending to support its expansion, with the company guiding for 2026 capex of up to $20 to $25 billion and continued negative free cash flow. That means the new enterprise distribution should be viewed as a sign of demand rather than an immediate catalyst for profitability.
The partnership could strengthen the platform narratives for both companies by adding another layer to their respective growth stories. However, it does not address the core investor concerns surrounding either stock. Palantir still faces questions over its elevated valuation, while Nebius has yet to demonstrate a clear path toward sustainable profitability. Those two issues remain very much unresolved despite the new partnership.
Which Offers Better Value, Palantir or Nebius?
On the surface, Nebius looks far cheaper, but the two trade on entirely different terms. Palantir is the profitable software layer, while Nebius is the cash-burning infrastructure layer. So the same measures can mean different things for each. Starting with earnings, Palantir carries a forward GAAP P/E of 108.66x, a steep multiple on its own. But the ratio cannot be compared against Nebius since it has no meaningful P/E at all. This is because the company is not yet consistently profitable.
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On sales, Palantir is considerably more expensive. At 48.68x, it sits 36% above its average of 35.69x, and the gap is even larger when compared against Nebius’ 18.70x. Beyond that cheaper sales multiple, most of the comparison favors Palantir. Analysts expect Palantir’s earnings to grow 114% in 2026, 45% in 2027, 44% in 2028, and 62% in 2029. For a company already worth nearly $400 billion, that trajectory is exceptional.
Nebius, by contrast, is not expected to post consistent profits any time soon. Management has guided capex of $20 billion to $25 billion for 2026, which is expected to weigh heavily on earnings. The balance sheet is also much stronger for Palantir. The company holds $9.41 billion in cash against almost no debt. Nebius holds $8.04 billion in cash against $10.2 billion in debt, and that debt figure will likely go up with the company planning to spend aggressively. Overall, Palantir charges a rich price for proven, profitable growth, while Nebius is cheaper on sales but still has to prove its build-out pays off.
What Are Analysts Saying About Palantir and Nebius Stocks?
Both Palantir and Nebius enjoy bullish sentiment on Wall Street. Just last week, Nebius received a $355 price target from Truist Financial, while Palantir’s price target was revised upward from $200 to $250 by D.A. Davidson. One can argue that nothing much changes with this partnership in the context of the risks involved in investing in these two. However, sentiment usually trumps valuation or risk concerns, so the reaction to the news is justified. For now, both stocks look to have considerable upside according to analysts.
On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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