Palantir (PLTR) Stock Drops 37% — But the Business Has Never Been Stronger

TLDR

• Palantir stock has dropped over 37% from its late-2025 peak despite strong business results
• Q1 2026 revenue jumped 85% year over year to $1.6 billion, with guidance raised
• U.S. commercial revenue surged more than 130% year over year
• D.A. Davidson upgraded PLTR to buy with a $175 price target, implying 34% upside
• Palantir announced a new strategic partnership with Nvidia to build AI models for the U.S. government

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Palantir (PLTR) stock has fallen more than 37% from its November 2025 peak. The stock currently trades around $129.49, with a 52-week range of $106.37 to $207.52.

Palantir Technologies Inc., PLTR

That kind of drop usually means something has gone wrong inside the business. In Palantir’s case, the business looks better than ever.

In Q1 2026, revenue came in at $1.6 billion, up 85% year over year. Management raised full-year guidance off the back of it. U.S. commercial revenue grew more than 130% year over year — the kind of number that puts the old “government contractor” label to rest.

The company also posted a 46% operating-income margin and a 57% free-cash-flow margin, even while investing heavily in growth.

So what’s going on?

The sell-off appears to be a valuation story, not a business one. At its peak, Palantir traded at a premium that assumed years of exceptional growth. As investor sentiment shifted away from high-multiple software stocks toward semiconductors, the premium compressed. The business didn’t change. The price did.

Even after the pullback, PLTR trades at a price-to-earnings ratio of 146. That’s still a high bar to clear.

D.A. Davidson Upgrades to Buy

The stock has started to bounce. PLTR is up 10.8% in July and 20.5% from its 52-week closing low hit on June 25.

D.A. Davidson analyst Gil Luria upgraded Palantir to buy from neutral on Thursday, raising his price target to $175 from $165. That implies 34% upside from current levels.

Luria’s case centers on Palantir’s AI orchestration tool, which lets enterprises build on top of multiple AI models rather than locking into a single provider like OpenAI or Anthropic. Recent friction between Anthropic and the U.S. government has made enterprise customers more cautious about that kind of dependence.

Palantir’s platform sits above the model layer, meaning customers aren’t exposed to the risk of any one model being shut down or restricted.

Luria also pointed to Palantir’s Ontology tool, which organizes and secures customer data without exposing it to the underlying AI model. That matters for industries dealing with sensitive or regulated data.

Nvidia Partnership Adds to the Momentum

On Monday, Palantir announced a strategic partnership with Nvidia to build AI models for the U.S. government.

CEO Alex Karp appeared on CNBC Wednesday to discuss it. He said that to make large language models useful in battlefield or regulated settings, an application layer is required. He described Ontology as that layer — one that keeps the LLM away from the customer’s raw data and intellectual property.

He added that Palantir is “completely agnostic” about which model customers choose to run on its platform.

The stock rose 2.8% on Thursday following the upgrade and sits at $129.49 as of market close.

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