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Palantir (PLTR) has been a big disappointment for its shareholders ever since President Donald Trump announced plans of lowering defense spending over the next five years.
But the selloff in shares of the big data analytics firm has gone a bit too far, making it reasonable to turn cautiously more positive on PLTR, according to William Blair analyst Louie DiPalma.
DiPalma upgraded Palantir stock this morning to “Market Perform,” adding “investors may continue to assign an AI premium” to it.
Is Palantir Stock Inexpensive to Own at Current Levels?
DiPalma’s upgrade is significant since he’s been bearish on Palantir shares due to valuation concerns.
And while the tech stock is still not inexpensive to own by any stretch of the imagination, the lofty multiple tied to it may not matter much, given the continued interest in AI technology, he told clients in a research note on Wednesday.
According to the William Blair analyst, PLTR stock may return to its peak of over $125 set in February “if the market reverts to risk-on mode.” Versus that high, shares of the Denver-headquartered firm are down more than 30% at the time of writing.
Can PLTR Withstand Reduced Military Spending?
DiPalma raised his rating on Palantir today as it could do reasonably well amidst a potential decline in U.S. military spending.
Why? Because its software can actually help organizations find ways to cut costs efficiently, which positions PLTR well to win sizable contracts from the government despite a lower overall budget.
Investors should also note that U.S. politicians have been loading up on Palantir stock in 2025. Four of them have built sizable positions in the data analytics firm, signalling confidence in its future prospects.
Should You Invest in Palantir Shares in March?
What’s also worth mentioning is thaDiPalma’s upgrade doesn’t necessarily mean he’s turned bullish on Palantir stock.
In fact, he continues to recommend caution as a meaningful deceleration in the company’s revenue growth could result in “valuation multiple contraction, potentially to 40 times free cash flow.” At the time of writing, PLTR shares are going for about 100 times its estimated free cash flow for the next year.
The rest of Wall Street seems cautious on the tech stock as well. The consensus rating on Palantir currently sits at “Hold” with the mean target of $85 indicating potential downside of 2.0% from here.
