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Cognyte vs Palantir: Which AI Intelligence Stock Is the Better Buy?
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Key Takeaways
PLTR's 85% revenues jump compares with Cognyte's 10.4% growth in the first quarter.
Palantir's U.S. revenues surged 104%, while U.S. commercial revenues jumped 133%.
Cognyte is growing recurring revenues but faces cash-flow pressure and U.S. execution risks.
Artificial Intelligence (“AI”) is reshaping the intelligence and analytics software landscape. The players in this domain are benefiting from heightened demand for AI-enabled investigative and intelligence solutions as simmering geopolitical tensions give rise to complex and massive volumes of data and the subsequent need for faster decision-making.
Cognyte Software (CGNT - Free Report) and Palantir Technologies (PLTR - Free Report) operate in this domain and have positioned themselves to capitalize on this trend, though they approach the market from different angles.
Against this backdrop, investors are now evaluating which players offer the best combination of growth, profitability and long-term strategic positioning.
Let us dive into the fundamentals, valuations, growth outlook and risks for each company to determine which stock offers better upside.
CGNT: Opportunities Plenty Amid Headwinds
Cognyte’s appeal lies in its positioning within a high-growth, mission-critical market. Governments and security agencies are dealing with increasingly complex threats, driving demand for advanced analytics and AI-driven intelligence platforms. Rising data volumes, fragmented intelligence sources and the need for faster decision-making are driving demand, as highlighted by the management.
Management remains focused on installed base expansion, new client acquisition and scaling of the U.S. market. The integration of AI into investigative workflows is emerging as a key differentiator. Cognyte is embedding AI into its operational systems platform, which creates a competitive moat.
A major highlight of the first quarter of fiscal 2027 was higher subscription and recurring revenues. Recurring revenues were up 10% to $51.9 million, accounting for nearly 49.2% of total revenues, improving long-term visibility. The company’s backlog and remaining performance obligations (“RPO”) strengthen revenue visibility. Total RPO was $528.8 million, with a backlog of $399.8 million at the end of the fiscal first quarter. Total RPO is the sum of contract liabilities and backlog.
As revenues scale (up 10.4% in the first quarter), profitability is also improving. Non-GAAP gross margin expanded 100 basis points to 72.9%. Non-GAAP operating income rose 41.5% to $10.7 million, while adjusted EBITDA grew 31.5% to $13.6 million. The company ended the quarter with $109.2 million in cash and no debt, maintaining a strong balance sheet.
Cognyte Software Ltd. Price, Consensus and EPS Surprise
However, investors remain wary as several concerns remain. The company reported a negative operating cash flow of $4.7 million in the quarter. The performance was affected by the transition to a subscription model, forex dynamics and inventory levels.
Challenges associated with the shift to a subscription model are that revenues are recognized over time rather than upfront. The transition may lead to temporary pressure on revenue growth and increased volatility in key financial metrics.
Moreover, the company’s expansion in the U.S. market, although promising, is still in its early stages and will require consistent execution to deliver results. Macro uncertainty, competition, rising operating expenses, forex headwinds and dependence on government spending cycles remain concerns. The company has reiterated its fiscal 2027 guidance. Revenues are expected to be $448 million (+/-3%) compared with $400 million in fiscal 2026.
Palantir: Remains Dominant Player in this Space
Palantir’s software platforms – Gotham, Foundry, Apollo and Artificial Intelligence Platform (“AIP”) – offer the infrastructure that customers need to integrate data and operations and run their software on any environment. On the most recent earnings call, management noted that AIP is seeing increasing traction across commercial enterprises, government agencies and defense organizations, helping drive top-line growth.
First-quarter revenues surged 85% year over year to $1.633 billion, buoyed by strong momentum in the U.S. business. This business contributed 79% of total revenues and grew 104% year over year to $1.28 billion. U.S. commercial revenues surged 133% year over year (up 143% when adjusted for a customer transition), underscoring strong enterprise adoption. Commercial TCV bookings for U.S business in the first quarter were up 45% year over year to $1.2 billion, underscoring strong demand visibility.
The government segment remains the key pillar of Palantir’s business, with first-quarter revenues growing 76% year over year. U.S. government revenues alone increased 84%. The company secured significant contracts, including a $300 million agreement with the U.S. Department of Agriculture.
Overall, PLTR closed 47 deals of at least $10 million, 72 deals of at least $5 million and 206 deals of at least $1 million in the last reported quarter. Total remaining deal value grew 98% year over year to $11.8 billion, while remaining performance obligations increased 134% to $4.5 billion. Palantir’s net dollar retention rate increased to 150%, driven by solid revenue growth across its existing customer base and new client acquisitions.
Palantir Technologies Inc. Price, Consensus and EPS Surprise
Palantir continues to deliver solid profitability. The company reported an adjusted operating margin of 60% and an adjusted gross margin of 88% in the first quarter. Adjusted free cash flow came in at $925 million for the quarter, equating to a 57% margin.
Management raised its full-year 2026 guidance, with revenues now expected to be between $7.65 billion and $7.662 billion. The company also increased its adjusted operating income forecast to $4.44 billion and $4.452 billion. Adjusted free cash flow is now expected to be between $4.2 billion and $4.4 billion.
Nonetheless, Palantir’s risks are primarily tied to heavy reliance on the U.S. business, execution constraints and rising costs. Operating expenses are rising due to investments in AI and personnel hiring, which could impact margins if growth falters.
Price Performances & Valuations of CGNT & PLTR
Year-to-date, CGNT and PLTR have declined 7.6% and 25.4%, respectively.
Image Source: Zacks Investment Research
In terms of the price/book multiple, Cognyte is trading at 2.9X, lower than Palantir’s 37.33X.
Image Source: Zacks Investment Research
How Does the Zacks Consensus Estimate Compare for CGNT & PLTR?
Analysts have revised their earnings estimates downwards for CGNT for the current fiscal year by 14.5% over the past 60 days.
Image Source: Zacks Investment Research
Estimates have been revised upwards by 11.2% for PLTR’s bottom line.
Image Source: Zacks Investment Research
CGNT & PLTR: Which Is a Better Pick?
CGNT currently has a Zacks Rank #5 (Strong Sell), and PLTR carries a Zacks Rank #2 (Buy).
In terms of the Zacks Rank, PLTR appears to be a better pick at the moment.
View the Zacks #1 Rank List
Image: Bigstock
Cognyte vs Palantir: Which AI Intelligence Stock Is the Better Buy?
Key Takeaways
Artificial Intelligence (“AI”) is reshaping the intelligence and analytics software landscape. The players in this domain are benefiting from heightened demand for AI-enabled investigative and intelligence solutions as simmering geopolitical tensions give rise to complex and massive volumes of data and the subsequent need for faster decision-making.
Cognyte Software (CGNT - Free Report) and Palantir Technologies (PLTR - Free Report) operate in this domain and have positioned themselves to capitalize on this trend, though they approach the market from different angles.
Against this backdrop, investors are now evaluating which players offer the best combination of growth, profitability and long-term strategic positioning.
Let us dive into the fundamentals, valuations, growth outlook and risks for each company to determine which stock offers better upside.
CGNT: Opportunities Plenty Amid Headwinds
Cognyte’s appeal lies in its positioning within a high-growth, mission-critical market. Governments and security agencies are dealing with increasingly complex threats, driving demand for advanced analytics and AI-driven intelligence platforms. Rising data volumes, fragmented intelligence sources and the need for faster decision-making are driving demand, as highlighted by the management.
Management remains focused on installed base expansion, new client acquisition and scaling of the U.S. market. The integration of AI into investigative workflows is emerging as a key differentiator. Cognyte is embedding AI into its operational systems platform, which creates a competitive moat.
A major highlight of the first quarter of fiscal 2027 was higher subscription and recurring revenues. Recurring revenues were up 10% to $51.9 million, accounting for nearly 49.2% of total revenues, improving long-term visibility. The company’s backlog and remaining performance obligations (“RPO”) strengthen revenue visibility. Total RPO was $528.8 million, with a backlog of $399.8 million at the end of the fiscal first quarter. Total RPO is the sum of contract liabilities and backlog.
As revenues scale (up 10.4% in the first quarter), profitability is also improving. Non-GAAP gross margin expanded 100 basis points to 72.9%. Non-GAAP operating income rose 41.5% to $10.7 million, while adjusted EBITDA grew 31.5% to $13.6 million. The company ended the quarter with $109.2 million in cash and no debt, maintaining a strong balance sheet.
Cognyte Software Ltd. Price, Consensus and EPS Surprise
Cognyte Software Ltd. price-consensus-eps-surprise-chart | Cognyte Software Ltd. Quote
However, investors remain wary as several concerns remain. The company reported a negative operating cash flow of $4.7 million in the quarter. The performance was affected by the transition to a subscription model, forex dynamics and inventory levels.
Challenges associated with the shift to a subscription model are that revenues are recognized over time rather than upfront. The transition may lead to temporary pressure on revenue growth and increased volatility in key financial metrics.
Moreover, the company’s expansion in the U.S. market, although promising, is still in its early stages and will require consistent execution to deliver results. Macro uncertainty, competition, rising operating expenses, forex headwinds and dependence on government spending cycles remain concerns. The company has reiterated its fiscal 2027 guidance. Revenues are expected to be $448 million (+/-3%) compared with $400 million in fiscal 2026.
Palantir: Remains Dominant Player in this Space
Palantir’s software platforms – Gotham, Foundry, Apollo and Artificial Intelligence Platform (“AIP”) – offer the infrastructure that customers need to integrate data and operations and run their software on any environment. On the most recent earnings call, management noted that AIP is seeing increasing traction across commercial enterprises, government agencies and defense organizations, helping drive top-line growth.
First-quarter revenues surged 85% year over year to $1.633 billion, buoyed by strong momentum in the U.S. business. This business contributed 79% of total revenues and grew 104% year over year to $1.28 billion. U.S. commercial revenues surged 133% year over year (up 143% when adjusted for a customer transition), underscoring strong enterprise adoption. Commercial TCV bookings for U.S business in the first quarter were up 45% year over year to $1.2 billion, underscoring strong demand visibility.
The government segment remains the key pillar of Palantir’s business, with first-quarter revenues growing 76% year over year. U.S. government revenues alone increased 84%. The company secured significant contracts, including a $300 million agreement with the U.S. Department of Agriculture.
Overall, PLTR closed 47 deals of at least $10 million, 72 deals of at least $5 million and 206 deals of at least $1 million in the last reported quarter. Total remaining deal value grew 98% year over year to $11.8 billion, while remaining performance obligations increased 134% to $4.5 billion. Palantir’s net dollar retention rate increased to 150%, driven by solid revenue growth across its existing customer base and new client acquisitions.
Palantir Technologies Inc. Price, Consensus and EPS Surprise
Palantir Technologies Inc. price-consensus-eps-surprise-chart | Palantir Technologies Inc. Quote
Palantir continues to deliver solid profitability. The company reported an adjusted operating margin of 60% and an adjusted gross margin of 88% in the first quarter. Adjusted free cash flow came in at $925 million for the quarter, equating to a 57% margin.
Management raised its full-year 2026 guidance, with revenues now expected to be between $7.65 billion and $7.662 billion. The company also increased its adjusted operating income forecast to $4.44 billion and $4.452 billion. Adjusted free cash flow is now expected to be between $4.2 billion and $4.4 billion.
Nonetheless, Palantir’s risks are primarily tied to heavy reliance on the U.S. business, execution constraints and rising costs. Operating expenses are rising due to investments in AI and personnel hiring, which could impact margins if growth falters.
Price Performances & Valuations of CGNT & PLTR
Year-to-date, CGNT and PLTR have declined 7.6% and 25.4%, respectively.
Image Source: Zacks Investment Research
In terms of the price/book multiple, Cognyte is trading at 2.9X, lower than Palantir’s 37.33X.
Image Source: Zacks Investment Research
How Does the Zacks Consensus Estimate Compare for CGNT & PLTR?
Analysts have revised their earnings estimates downwards for CGNT for the current fiscal year by 14.5% over the past 60 days.
Image Source: Zacks Investment Research
Estimates have been revised upwards by 11.2% for PLTR’s bottom line.
Image Source: Zacks Investment Research
CGNT & PLTR: Which Is a Better Pick?
CGNT currently has a Zacks Rank #5 (Strong Sell), and PLTR carries a Zacks Rank #2 (Buy).
In terms of the Zacks Rank, PLTR appears to be a better pick at the moment.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.