Palantir Technologies (PLTR) on Wednesday won an upgrade to market perform rating from a longtime bearish analyst who cited its lower valuation amid a recent pull back. Palantir stock has gained more than 11% in 2025

On the stock market today, Palantir stock rose more than 3% to 87.14 in morning trading.

Palantir stock hit its all-time intraday high of 125.41 on Feb. 19 and closed at 112.06 that day. Shares have retreated over 30%.

"While valuation is still frothy with potential downside risk of greater than 40% on government contract delays, there have been positive developments," said William Blair analyst Louie DiPalma in a report. "If the market reverts to risk-on mode, the stock price may return to its prior peak, but we expect shares to be range-bound over the next year with continued elevated volatility given the puts and takes. A government shutdown on March 15 may cause further downside pressure."

Further, Palantir has given up most gains since popping on fourth quarter earnings.

Institutional ownership has weakened. Also, Palantir has dropped off the IBD 50 roster of growth stocks.

Palantir Stock: AI Premium Valuation

Palantir's 2024 surge owed much to investor interest in artificial intelligence stocks.

Meanwhile, Palantir has provided data analytics tools to government customers for intelligence gathering, counterterrorism and military purposes. Now Palantir aims to use generative AI to spur growth in the U.S. commercial market.

Palantir's stock retreat ostensibly is tied to possible Department of Defense budget cuts. One concern is Palantir's exposure to U.S. Army contracts. Meanwhile, Palantir Chief Executive Alex Karp plans more share sales.

"Our thinking on Palantir's valuation has evolved," added DiPalma. "One of our biggest pushbacks on Palantir has been its outlier premium valuation. Given the market exuberance for AI companies and the resiliency of Palantir's premium multiple, we are adapting our approach to valuation. Investors may continue to assign Palantir an 'AI premium.'"

Palantir Stock Technical Ratings

Meanwhile, Palantir's Relative Strength Rating stands at 99 out of a best-possible 99.

Also, Palantir stock holds a Composite Rating of 98 out of a best-possible 99, according to IBD Stock Check-up. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

PLTR stock holds an Accumulation/Distribution Rating of E, down from B-minus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.

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