What Happened

Palantir (PLTR) saw its stock increase by 5% on Thursday.

What’s Behind This Move

This rise can be attributed to DA Davidson analyst Gil Luria upgrading the stock from a “neutral” to a “buy” rating and adjusting his price target from $165 to $175.

In pre-market trading, shares surged by 7%, which further extended gains following the announcement of a new AI partnership with Nvidia (NVDA) that focuses on government and other security-sensitive clients.

Luria noted, “The skyrocketing profits have boosted Palantir’s valuation and raised its multiple, giving investors a gift just in time for the United States’ 250th birthday.”

He also remarked that Palantir’s valuation is currently quite attractive compared to other high-growth software firms.

Interestingly, Luria mentioned that Palantir is growing at twice the rate of other AI-oriented software companies like Snowflake (SNOW), Shopify (SHOP), Datadog (DDOG), and CrowdStrike (CRWD).

What Else You Should Know

Luria highlighted that recent developments have reinforced a crucial advantage of Palantir’s orchestration tools. They allow clients to switch between AI models without significant disruption.

He wrote about Anthropic’s confrontational approach with the U.S. government, leading to restrictions on its AI models and their withdrawal from the market. “If enterprise customers had built their businesses directly on these models, the disruption could have been catastrophic,” he added. In contrast, those using orchestration tools like Palantir would face only minor disruptions as models are replaced as needed.