Palantir shares dip this year; D.A. Davidson says buy the weakness
Palantir shares have declined this year, but D.A. Davidson upgrades the stock to buy, citing attractive valuation and growth prospects.
Palantir Technologies shares have struggled this year, but D.A. Davidson is advising investors to buy the dip.
The data analytics company's stock has declined year-to-date, underperforming the broader market. D.A. Davidson upgraded Palantir to buy from neutral, arguing that the recent pullback presents a buying opportunity. The firm cited Palantir's strong position in artificial intelligence and government contracts as key growth drivers, along with a more attractive valuation after the selloff. The upgrade comes as Palantir's forward P/E has compressed from elevated levels, though it still trades at a premium to the S&P 500's forward multiple of around 20x. D.A. Davidson's call aligns with the Fed model, which compares earnings yield to the 10-year Treasury yield; with the 10-year yield near 4.5%, Palantir's earnings yield remains below that threshold, but the gap has narrowed after the decline. The stock's buyback yield is negligible, as Palantir prioritizes reinvestment over repurchases, but options-implied volatility has spiked, suggesting traders are pricing in larger swings ahead.
For stock market traders, the upgrade highlights how analyst sentiment can shift after a sustained decline, potentially signaling a floor for the stock. On NowPrice, live stock prices and charts show how Palantir is reacting to the news, with investors weighing the upgrade against broader tech sector headwinds. The move also reflects a broader theme of selective buying in beaten-down growth stocks, as traders look for value amid elevated interest rates. Breadth indicators, such as the advance-decline line for the S&P 500, have weakened recently, but sector rotation into AI-related names could provide support. Palantir's high beta means it is sensitive to macro shifts, and the stock's correlation with the Nasdaq 100 has increased, making it a proxy for risk appetite. The upgrade may also trigger short covering, as short interest remains elevated relative to peers.
Looking ahead, Palantir's next earnings report will be a key catalyst, with investors watching for revenue growth from its AI platform and government deals. The stock's ability to hold above recent lows will be critical for technical traders, while any further analyst upgrades could reinforce the bullish case. If the broader market stabilizes and interest rates ease, Palantir's forward P/E could re-rate higher, but a miss on earnings could reverse the gains. Options markets are pricing in a 10% move post-earnings, reflecting uncertainty. For now, D.A. Davidson's upgrade provides a tactical entry point, but sustained upside depends on execution and macro conditions.