Palantir leads agentic AI rally with 10% surge on BofA target

Agentic AI software stocks rallied in lockstep Friday, with Palantir surging 10 percent to $170.76 after Bank of America raised its price target to $255, while UiPath climbed 7 percent and C3.ai gained 5 percent.

"Demand for AI sovereignty has now been unleashed," Alex Karp, chief executive officer of Palantir, said after the company's Q2 report.

Palantir's Q2 revenue rose 92.8 percent year over year to $1.94 billion, beating the $1.81 billion consensus, with U.S. commercial revenue up 149 percent to $764 million and total contract value up 153 percent to a record $2.1 billion. The company raised its full-year revenue guidance to $8.15 billion and guided Q3 revenue to $2.16 billion. UiPath and C3.ai, which sat out Monday's initial Palantir-driven move, caught the sympathy bid Friday as the iShares Expanded Tech-Software Sector ETF gained 3 percent to $102.24, extending its weekly advance to 8 percent.

The valuation spread across the trio is wide. Palantir trades at 146.08 times trailing earnings, while UiPath carries a 24.79 times multiple and C3.ai remains unprofitable on a trailing basis, making Friday's move in the latter a sentiment trade rather than an earnings-based re-rating.

BofA Fuels the Palantir Leg

The proximate catalyst was a Bank of America note reiterating a Buy rating and raising its price target to $255, implying 50 percent upside. Analysts pointed to Palantir's AI strategy, expanding U.S. commercial book, deep customer partnerships, outcome-based pricing and growing role in sovereign AI. Some of the intraday velocity also reflected short covering after this week's strong Q2 report and raised full-year guide.

Deutsche Bank's Brad Zelnick upgraded Palantir to Buy from Hold with a $200 price target, joining Citi and D.A. Davidson's Gil Luria, who cited "parabolic" U.S. AI demand. Jefferies' Brent Thill kept an Underperform rating while raising his target to $80 from $70, warning that "the setup gets harder from here" as comparisons stiffen into 2027 and international growth moderates.

Valuation Dispersion Tests the Rally

Investors piling in Friday may want to note how wide the quality and valuation spread runs across the trio. Palantir trades at a trailing 12-month P/E ratio of 146.08 times, priced for near-perfect execution on the sovereign AI thesis. UiPath, by contrast, carries a far more digestible trailing multiple of 24.79 times, offering exposure to the same secular theme at a fraction of the cost. C3.ai has no trailing P/E because it is unprofitable on that time frame, so Friday's move is essentially a sentiment trade.

The bull case on Palantir is that operational AI, outcome-based pricing and government mindshare compound faster than the multiple compresses. The bear case is straightforward: at 146 times trailing earnings, any misstep can trigger sharp drawdowns, and insider selling has been active into strength.

Palantir shares, down 29 percent year to date before the earnings bump, now trade at 84 times forward earnings, down from a 199 times four-quarter average but still well above the S&P 500's 20 times. Prediction markets skew bullish, with Polymarket assigning a 0.85 probability that Palantir hits $150 in August. Whether Friday's move holds depends on follow-through in UiPath and C3.ai next week, and whether the IGV tape keeps advancing — a signal the rally extends beyond Palantir's headline.

This article is for informational purposes only and does not constitute investment advice.