Palantir Technologies Inc concluded Friday's trading session with a notable gain, as shares climbed 1.8% to settle at $131.41. The advance came amid significant volatility, with the stock oscillating between a session low of $128.52 and a high of $133.04. Trading activity was robust, with approximately 49 million shares changing hands ahead of the long U.S. holiday weekend, which saw markets closed on Monday, February 16, 2026, for Presidents Day.
Defense Cloud Authorization Fuels Momentum
The primary catalyst for the stock's movement was a significant regulatory milestone announced by the company on Thursday. Palantir disclosed that the Defense Information Systems Agency (DISA) has granted clearance for its Palantir Federal Cloud Service (PFCS) Forward. This authorization expands the company's existing provisional Impact Level 5 (IL5) and Impact Level 6 (IL6) approvals to encompass both on-premises and edge computing deployments. In essence, this allows U.S. government clients to deploy Palantir's sophisticated data analytics software stack in a wider array of operational environments, including remote field locations with limited connectivity.
Akash Jain, President and Chief Technology Officer of Palantir USG, emphasized the strategic importance of the clearance, stating, "The future of warfighting demands software that can operate anywhere—from enterprise data centers to the tactical edge." The company promotes an "authorize once, use many" framework, which it claims can significantly accelerate the process for obtaining an Authority to Operate (ATO), the formal approval required to run systems on secure government networks.
Market Context and Investor Sentiment
The positive news for Palantir emerged against a backdrop of general weakness in the technology sector. The Nasdaq Composite index closed lower on Friday, pressured by declines in several large-cap technology names. Michael James, managing director at Rosenblatt Securities, noted the challenging market sentiment, observing that "any whiff of optimism continues to get rejected." This environment highlights the bifurcated narrative surrounding Palantir, where company-specific catalysts contend with broader sector headwinds.
With U.S. equity markets closed on Monday, investors were afforded a brief respite to digest the implications of the DISA authorization and other late-week developments concerning defense and artificial intelligence (AI) stocks. The focus now shifts to Tuesday's market reopen on February 17, 2026, which will serve as a critical test for Palantir's near-term price direction.
Valuation Debate Resurfaces
Counterbalancing the positive contract news is a renewed debate over Palantir's valuation. Prominent investor Michael Burry, known for his prescient calls during the 2008 financial crisis, recently articulated a bearish stance. In a new Substack post, Burry argued that the stock's "fair price" sits substantially below its current trading levels. He further revealed a position in put options, a derivatives strategy that profits from a decline in the underlying asset's price.
This warning underscores the persistent concern among some market participants that Palantir's share price may already reflect years of flawless execution and hyper-growth, particularly in its burgeoning AI segment. The company, which provides data analytics platforms to government and commercial clients, has increasingly positioned itself at the center of the generative AI revolution, embedding these tools into enterprise workflows.
Implications and Forward-Looking Risks
The immediate question for traders and analysts is whether the DISA authorization will translate into tangible, follow-on contract awards and signal broader adoption of Palantir's platforms for sensitive, disconnected workloads. Success in this domain could help lock in reliable, long-term government revenue streams, a key pillar of the bullish investment thesis.
However, the risks are pronounced. Palantir's stock has historically been prone to sharp corrections when investor enthusiasm wanes. Any indication of cooling demand, procurement delays, a competitive threat, or a broader sector rotation away from richly valued AI and technology names could trigger significant selling pressure. The stock's sensitivity stems from its potent mix of defense sector exposure, high growth expectations, and its status as a bellwether for the commercial AI software trade.
As trading resumes on Tuesday, market participants will be closely monitoring order flow to gauge whether the momentum from the defense authorization can outweigh the lingering valuation apprehensions highlighted by critics like Burry. The session's price action will offer critical insight into whether investors continue to prioritize Palantir's strategic contract pipeline or become increasingly preoccupied with its premium valuation multiples.
