Palantir Technologies shares rose sharply in Thursday trading, climbing 7.9% by 3:30 p.m. ET as the broader market also moved higher. The S&P 500 gained 0.5% and the Nasdaq Composite added 0.8%, providing a supportive backdrop for the stock’s advance. Even with the one-day jump, Palantir remains down about 20% year to date, highlighting how much ground it has lost earlier in 2026.
The move came amid renewed attention on defense and drone-sector spending after The Wall Street Journal reported that the U.S. government may be preparing direct investments in domestic drone companies. The report identified Unusual Machines, Performance Drone Works, and Neros Technologies as potential recipients of government-backed funding tied to the sector. Palantir was not named in the report, but investors appeared to see a possible indirect benefit for the company because of its role in providing software that supports drone applications across multiple providers.
Palantir has also been expanding its footprint in the drone ecosystem. In March, the company announced a significant partnership with Ondas, a drone technology provider. That connection has added to speculation that the company could gain from any broader increase in U.S. support for drone development, manufacturing, and defense-related applications. As governments continue to focus on unmanned systems and battlefield technologies, Palantir’s data and software platforms may remain relevant to the industry’s growth.
Despite the recent rebound, Palantir’s valuation remains a key concern for investors. The stock is trading at roughly 98 times expected earnings for this year and about 44 times expected sales, levels that indicate a premium priced into the shares. Such a valuation leaves little room for execution missteps and makes the stock more sensitive to shifts in sentiment. Still, Palantir has a track record of outperforming Wall Street expectations on both revenue and earnings, which has helped sustain bullish interest among supporters of the company.
The long-term case for Palantir rests largely on continued demand for its software in defense and government markets, along with its ability to maintain strong growth while converting new contracts into durable revenue. Supporters argue that the company is well positioned to benefit from geopolitical tensions, increased military technology spending, and greater adoption of AI-driven systems. Critics, however, point to the stock’s steep valuation as a risk, especially if growth slows or market enthusiasm fades.
For investors with a high risk tolerance and a long time horizon, Palantir may still offer meaningful upside if it continues to win business and expand its role in strategic industries. But the stock’s premium pricing means it is not suited for every portfolio, and short-term volatility is likely to remain high.
