Palantir Rises After DA Davidson Upgrade, Nvidia Deal

Palantir Technologies shares rose more than 4% in premarket trading after DA Davidson upgraded the stock to Buy and raised its price target to $175 from $165. The upgrade followed an 8% gain in the prior session tied to a new partnership with Nvidia. DA Davidson’s new target implies roughly 40% upside from current levels.

DA Davidson argued Palantir’s software acts as an orchestration layer above multiple AI models, letting customers switch underlying models without redesigning workflows. The brokerage pointed to recent regulatory and commercial disruptions affecting some model providers as an example of changing model availability. “Organizations using an orchestration platform such as Palantir would face only limited disruption because the company can replace AI models underneath its software without requiring customers to redesign their workflows,” DA Davidson wrote.

The firm noted Palantir has shown faster earnings and improved profitability, and highlighted recent financial results. Revenue rose 68% over the past 12 months to $5.2 billion and the company reported a gross profit margin of 84%.

Palantir and Nvidia said they will collaborate to develop custom AI models for U.S. government use. The agreement calls for Nvidia’s AI infrastructure and Nemotron models to be integrated with Palantir’s platforms to create what the companies described as a secure “intelligent engine” capable of training, deploying and managing models across government agencies. The partnership is expected to expand Palantir’s work in defense and intelligence markets.

Market data show Palantir shares remain down about 25% year-to-date after a 356% surge in 2024. Morningstar equity analyst Mark Giarelli assigned a fair value estimate of $153, which implies the shares trade roughly 24% below that valuation. “Palantir differentiates itself as the only AI company with a framework that organizes disparate datasets and facilitates optimized decision-making,” Giarelli wrote.

Morningstar projects a five-year compound annual revenue growth rate near 45% and models a total addressable market of about $1.4 trillion by 2033. The firm expects Palantir’s gross margin to stay in the 83%–85% range over the next decade while noting rising cloud costs and competition could affect profitability.

Both DA Davidson and Morningstar noted uncertainty about the ultimate size of the market Palantir can capture and the company’s ability to maintain its competitive advantage.