Why Palantir Technologies Stock Popped (Again) on Thursday

Palantir Technologies (NASDAQ:PLTR) stock continued its winning streak on Thursday, climbing as much as 7.9%. As of 3:23 p.m. ET, the stock was still up 7.9%.

The artificial intelligence (AI) software and data mining specialist continued a trend that began earlier this week when the company reported blockbuster financial results. Since then, Wall Street has been scrambling to update its models, which has resulted in a raft of upgrades and price target increases.

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Jumping on the bandwagon

When Palantir released its fourth-quarter report after the market close on Monday, the strength of the results caught many investors by surprise. The company beat consensus estimates on both ends of the income statement, forcing analysts to rethink their expectations.

• Morgan Stanley analyst Sanjit Singh upgraded the stock from underweight (sell) to equal weight (hold) while boosting its price target to $95 from $60, though that's below that stock's current price (as of this writing). The analyst is still concerned about the valuation but sees additional upside ahead.
• Wedbush analyst Dan Ives maintained his outperform (buy) rating and increased his price target to $120, up from its previous level of $90, representing potential gains for investors of 18%. He said that Palantir is "playing chess in the AI arms race while others play checkers." He went on to call Palantir a "transformational tech stock" that's changing the landscape.
• Bank of America analyst Mariana Perez Mora emerged as the biggest bull with a Street-high price target of $125, which represents potential upside for investors of 23% compared to Wednesday's closing price. The analyst noted that while some AI solutions would become commodities, Palantir's value proposition "is only becoming more pronounced."

There were many more, but you get the point. By my count, there were at least eight price target increases, though some analysts were admittedly playing catch-up.

To be clear, there's a downside to all the current euphoria. The stock is currently selling for 195 times next year's expected earnings, which doesn't give Palantir a lot of room for error. While AI is the most groundbreaking technology in decades, investors should exercise caution with Palantir stock at this price.

Don't get me wrong: I'm an unadulterated Palantir bull, but even I expect a double-digit pullback in the stock price at some point over the coming year.

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Bank of America is an advertising partner of Motley Fool Money. Danny Vena has positions in Palantir Technologies. The Motley Fool has positions in and recommends Bank of America and Palantir Technologies. The Motley Fool has a disclosure policy.