Palantir Stock Tanks 10% Despite HSBC Upgrade

This article first appeared on GuruFocus.

Palantir (NASDAQ:PLTR) shares plunged nearly 10% on Wednesday morning despite an upgrade from HSBC, which moved its rating to “Buy” from “Hold” and raised its price target to $205 from $197.

HSBC analyst Stephen Bersey said he expects the U.S. commercial segment to see a compound annual growth rate of 58.8% from 2025 to 2029, reaching $9.3 billion in 2029. Bersey pointed to Palantir’s 4Q25 commercial momentum, noting revenue rose 137% year-on-year to $507 million (3Q25: up 122%), and that total contract value of new agreements was $1,344 million in 4Q25 versus $1,310 million in 3Q25.

Bersey’s upgrade and higher target reflect that performance, but he cautioned the return on invested capital for some internal enterprise AI projects can be disappointing, which may slow the tempo of future contract signings.

Investors appeared to focus on those cautionary notes despite the firm results, sending the shares lower. Market participants will likely watch incoming sales and contract disclosures closely for evidence of sustainable commercial growth.

Analysts and investors await Palantir’s next quarterly update and guidance closely.