Palantir Technologies shares jumped 30 percent on Tuesday, erasing the year-to-date paper profits of investors betting against the stock and leaving them with three billion dollars in mark-to-market losses, according to S3 Partners data. The cohort had been sitting on a 2.7 billion dollar paper gain through Monday’s close; the forecast upgrade that arrived after the bell on Monday turned that position into a deficit in a single session.
The reversal
The move coincided with Palantir’s decision to raise full-year revenue and income guidance, a step that halted a slide that had made the stock one of the year’s most profitable short trades. Even after Tuesday’s rally, the best daily performance in two years, shares remain more than 8 percent lower for 2026, on track for their worst annual return since 2022. Michael Burry, who disclosed bearish wagers on Palantir and Nvidia in November, said in June that he had covered half his short position.
Valuation debate
The rally has not settled the argument over price. Palantir trades at more than 83 times forward earnings, a multiple that sits well above the broader market. Jefferies analysts led by Brent Thill kept an underperform rating, writing that the setup gets harder from here and flagging Microsoft, Amazon and Snowflake as offering better risk versus reward. Their view is that the fundamental story is intact but the entry point is no longer compelling.
Analyst split
Not every firm sees it that way. Deutsche Bank’s Brad Zelnick upgraded to buy from hold with a 200 dollar price target, arguing that another beat-and-raise quarter justifies the premium. He described Palantir as operating several steps ahead of the rest of software in converting AI demand into real customer value. Roughly 70 percent of analysts tracked by Bloomberg now rate the stock a buy, a consensus that sits uncomfortably alongside the valuation bears.
What to watch
The next test is whether commercial demand sustains the trajectory management implied. Chief Executive Alex Karp characterized it as “otherworldly” on Monday, a phrase that calmed some concern that tools from AI developers such as Anthropic could displace Palantir’s analytics platform. For now, the short side has been flushed; the question is whether the long side has the conviction to hold a stock that still trades at a multiple most software companies never see.