Palantir Technologies (PLTR) shares experienced a modest recovery in early trading on Friday, February 13, 2026, rising approximately 1.2% to $130.71. This uptick followed a significant decline in the prior session, which was largely attributed to renewed bearish commentary from prominent investor Michael Burry.
Burry's Bearish Thesis and Market Reaction
The recent volatility was ignited when Burry, famed for his successful bet against the U.S. housing market prior to the 2008 financial crisis, disclosed a position in put options on Palantir. In his analysis, he suggested a potential valuation floor for the stock as low as $46 per share. While clarifying he is not directly short the equity, the use of put options—which gain value when a stock price falls—signals a clear expectation of downside. This intervention has intensified the ongoing debate surrounding the appropriate valuation for high-growth, artificial intelligence-linked companies like Palantir, especially as the stock had already retreated from its November 2025 peak.
Defense Contract Expansion Provides Counterweight
Offsetting the negative sentiment, Palantir concurrently announced a significant regulatory milestone with the U.S. Department of Defense. The Defense Information Systems Agency (DISA) granted an expanded Authorization to Operate (ATO) for the company's Palantir Federal Cloud Service (PFCS) Forward. This approval extends the platform's existing Impact Level 5 and Impact Level 6 provisional authorizations to include on-premises and edge computing environments, broadening its potential deployment within sensitive defense and government networks. Akash Jain, President and Chief Technology Officer of Palantir USG, emphasized that "the future of warfighting demands software that can operate anywhere," underscoring the strategic importance of this development.
The company's recent financial performance has been robust, particularly within its government segment. For the fourth quarter, U.S. government revenue surged 66% year-over-year to $570 million, contributing to total revenue of $1.41 billion, which exceeded analyst expectations. This growth highlights Palantir's continued success in securing large, durable contracts within regulated sectors, a business model that can provide revenue stability but does not entirely insulate the stock from shifts in broader market sentiment toward high-valuation technology names.
Analyst Sentiment and Valuation Concerns
Following Burry's note, analysts at DA Davidson maintained their neutral rating on Palantir, stating they found "no new evidence" to alter their outlook. However, they cautioned that the stock's current price level and potential for continued volatility warranted a steady stance. The broader analyst community remains divided on the stock's prospects, reflecting the core tension between its impressive revenue growth and its premium valuation metrics.
The central risk for Palantir, as highlighted by recent events, is that its share price remains vulnerable to a downward re-rating if momentum in AI-related corporate or government spending decelerates, or if its contract growth fails to meet lofty expectations. While Friday's bounce provided temporary relief, such recoveries may prove fleeting if macroeconomic or sector-specific headwinds strengthen.
Investors should note an upcoming market closure. U.S. equity markets will be shut on Monday, February 16, in observance of Presidents Day, with regular trading resuming on Tuesday.
