Planet Labs (PL) has been one of the most surprising winners in the market this year. The stock is up 74% year-to-date (YTD), wildly outperforming the S&P 500 Index ($SPX) and most big tech stocks. The current global scenario is stressful, with the U.S.-Iran-Israel war escalating, making real-time Earth observation mission-critical. Planet Labs, which operates a network of satellites that capture and analyze daily images of the Earth, has quietly built one of the most valuable AI-powered data platforms that governments can rely on.
While the 65% gain may entice investors to grab profits, Planet Labs could still be in the early innings of a much bigger story.
A Stock Fueled by More Than Just Hype
Valued at $11.5 billion, Planet Labs is a space and data company that runs a huge fleet of tiny satellites to gather daily images of the Earth. The company then processes the images with software and artificial intelligence (AI) to detect changes, track activities, and analyze patterns over time. Planet Labs then sells these actionable insights to governments, defense organizations, and businesses. It makes money by providing subscription services (access to satellite data), analytics solutions (AI-powered insights), and building satellites for the government.
PL stock's rally this year is not just fueled by hype. In the recent fourth quarter of fiscal 2026, Planet Labs reported revenue of $300 million, an increase of 26% year-over-year (YoY). The company achieved its fifth straight quarter of positive adjusted EBITDA of $2.3 million. This fiscal year marked two major milestones. The company achieved its first full year of adjusted EBITDA profitability of $15.5 million. It also reported its first annual positive free cash flow of $52.9 million. This combination of growth, profitability, and cash flows is rare for a sector that burns cash heavily. It could be the reason why investors are suddenly more optimistic about the stock.
Defense Demand Is Driving a Structural Tailwind
Defense demand is one of its biggest growth engines today. Its Defense and Intelligence segment surged roughly 50% YoY, and management cited the segment as a core growth driver going ahead. Planet's satellites use daily imaging of Earth to observe military activity, infrastructure improvements, and detect early warning signs. The company signed numerous government contracts, including collaborations with U.S. defense agencies, NATO, and European governments. In a world dominated by geopolitical uncertainty, this is not a cyclical demand anymore.
Planet Labs is even monetizing its infrastructure through Satellite Services beyond just selling data. The company is now signing large contracts to build and deploy satellites for governments. In fiscal 2026, the company signed a nine-figure, multi-year deal with Sweden and a €240 million agreement funded by Germany. These deals generate revenue and strengthen Planet’s long-term competitive moat. These contracts will also allow Planet Labs to expand its satellite network with external funding. The company is using AI heavily to unlock its next phase of growth. It is building AI-powered solutions to quickly understand vast amounts of Earth observation data.
The Number That Impressed Investors
The most impressive number this fiscal year was the company’s backlog of $900 million, which increased 79% YoY. This backlog provides clear revenue visibility and reflects management’s confidence in future growth. The company is now prioritizing high-value customers and government contracts. This strategy contributes to increased revenue per customer and steady recurring revenue, which now makes up 98% of its contract value. Net dollar retention rate stood strong at 116% in fiscal 2026.
Balancing Growth and Profitability Is the Challenge
Despite the progress, Planet Labs is still in its early phases of development. This requires significant capital investments to increase satellite manufacturing capacity and develop next-generation fleets. This will continue to impact profitability. The company's bottom line remains in the red, with an adjusted net loss of $0.04 per share for the fiscal year. Despite aggressive scaling, management emphasized that the company's goal remains to sustain yearly EBITDA profitability and positive free cash flow.
In fiscal 2027, the company expects revenue to range between $415 million and $440 million, a 39% increase at midpoint, in line with the consensus estimates. Analysts expect revenue to increase further by 21.6% in fiscal 2028, with losses eventually declining. Trading at 26 times forward sales, Planet Labs, though pricey, reflects investors’ confidence in its growth story.
What Is the Street Saying About PL Stock?
On Wall Street, PL stock is a “Moderate Buy.” Of the 12 analysts covering the stock, seven rate it a “Strong Buy,” one says it is a “Moderate Buy,” and four rate it a “Hold.” On March 20, the stock surged 25.5%, driven by a strong quarter, and surpassed its average target price of $26.44.
Following the results, Cantor Fitzgerald increased its price target for Planet Labs from $20 to $40, setting a new high price estimate for the stock. The analyst says the stock is a “Buy” even though it is expensive now, citing that the company’s core business is getting stronger with the government and more industries relying on its satellite data and AI-powered insights. The analyst believes this could help Planet generate more stable and consistent cash flow over time, making it a stronger long-term investment despite short-term market risks.
Similarly, Wedbush and Needham raised the target price to $40 with a “Buy” rating, which implies an upside potential of 17% from current levels.
Note that the new high price target isn't yet reflected on the Barchart page.
The Bottom Line
The 65% rally may tempt investors to cash in on the big profits, but Planet Labs’ fundamentals suggest otherwise. Planet Labs is evolving from a speculative space bet to a scalable, data-driven platform with strong government demand, improving financials, and enormous AI potential. This may not be the peak—rather, this might just be the beginning for Planet Labs.
