Palantir Technologies stock jumped 30% on Tuesday. The surge wiped out $3 billion in short sellers’ paper profits for 2026.
The rally marked Palantir’s best single-day performance in two years, S3 Partners LLC said. Short sellers had built a $2.7 billion paper gain before Monday’s earnings news reversed course.
Earnings Beat Catches Bears Off Guard
The reversal followed Monday’s raised full-year forecast, which beat Wall Street’s revenue and income estimates. Short sellers, who had profited from Palantir’s sluggish run, watched those gains disappear in a single session.
Meanwhile, investor Michael Burry disclosed a bearish position against Palantir in November. His short bet helped trigger the stock’s earlier slide. He later said in a June newsletter that he had covered half of that position.
Palantir still trades down 10% for 2026, on pace for its worst year since 2022. The stock’s earlier slide followed months of contract concerns surrounding its government business.
Palantir Still Showing Risks
Some analysts still see risk in Palantir’s valuation. The stock trades at more than 83 times forward earnings. Jefferies kept an underperform rating on the stock, seeing better risk-reward in other AI-linked software names, including Microsoft and Amazon.
In contrast, Deutsche Bank analyst Brad Zelnick took the opposite view. He upgraded Palantir to buy from hold and kept a $200 price target, pointing to a second straight beat-and-raise quarter.
CEO Alex Karp addressed one lingering worry on the earnings call. He called commercial demand for Palantir’s data analytics tools “otherworldly.” That eased fears that rival AI developers could erode its software business.
Nearly 70% of analysts covering Palantir now rate the stock a buy. Its rally’s staying power, therefore, may hinge on whether commercial demand keeps justifying Palantir’s premium price.