Palantir Stock Won a Huge Upgrade. Can an AI Supercycle Power Shares Higher?

Shares of Palantir (NASDAQ:PLTR | PLTR Price Prediction) have continued to sag in recent weeks despite a promising number of new developments, including a huge deal with South Korea’s Hyundai, which is reportedly being pinned as being worth in the ballpark of “hundreds of millions.” Undoubtedly, it’s another big-league deal in the books and one that could act as a huge win for both companies. Palantir also collaborated with another firm for work on data centers in Europe, the Middle East, and Africa.

Add a recent upgrade from a big-name bank in Citi into the equation, and it certainly feels like the latest bearish dip is worth getting behind, even though the valuation on shares remains incredibly high. There has been a good amount of deal-making momentum of late. Though, such deals have been less of a needle-mover of late, given the recent surge in volatility surrounding the higher-multiple AI stocks.

Lots of good news is coming in, but it hasn’t been enough

With quarterly earnings just over a week away, there’s sure to be a lot of action in the name as it looks to impress amid fairly high expectations. Undoubtedly, it’s easy to throw in the towel on the name as negative momentum picks up.

While Michael Burry, who’s holding bearish bets against the company, might be cheering the latest move lower, it’s difficult to know what to do as the bulls and bears make their cases. At this juncture, the bull and bear cases are both pretty convincing. But, of course, the downside risks could be considerable, given the 169 times forward price-to-earnings (P/E) multiple.

Of course, an opportunity to buy at a more than 20% dip may seem enticing if you’re keen on betting on Alex Karp and company (and against the great Dr. Michael Burry) in what appears to be another critical year for AI.

Citi’s upgrade has to be encouraging for the Palantir bulls

Citi analyst Tyler Radke is one of the more vocal bulls on Palantir lately, recently hiking the stock to a buy from neutral (the equivalent of a hold rating) while bumping his price target by $25.00 to $235.00. Such a price target implies a respectable amount of upside from here, but, of course, ample risk will need to be taken on for a shot at such a gain. Radke doesn’t seem too deterred by the price of admission, especially since there’s momentum behind agentic AI and enterprise adoption.

While there may still be an AI supercycle, I’m just not sure how much of one is already priced into Palantir right here. Unlike Radke, who thinks the valuation is “palatable” given the growth drivers, I’d be more inclined to look elsewhere for value, especially since we’ve seen a number of AI companies report wonderful results only to be met with intense selling. That’s the problem with buying a growth icon at a premium price tag. Even Cathie Wood’s Ark Invest has been trimming its stake in Palantir lately, which isn’t all too encouraging.

Also, I’m just not comfortable going against Burry with a name that, on the surface, looks to be one of the priciest large caps out there. While enterprise and government momentum is going strong, with the potential to keep impressing, I just don’t know how investors are going to respond to a quarter that I’m sure is going to be a great one.

A supercycle is tough will be tough to time

How do you impress such a tough crowd? Time will tell. Either way, I’m sticking to the sidelines because the bull case is no mystery anymore. In the meantime, it’d be nice to see how the next quarter fares to see if there’s any sign of an enterprise adoption inflection point.

Perhaps the enterprise is ready to move on from dabbling and experimentation towards more serious, and far more expensive, AI strategies. If such a shocker is in the cards, Palantir stock might have room to resume its rally. Until then, it’s going to be a choppy next couple of months, as new partnerships and analyst upgrades might not be enough to nudge Palantir shares out of a nasty bearish descent.