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Palantir (PLTR) stock jumped more than 2% on Thursday after D.A. Davidson analyst Gil Luria upgraded it to a Buy rating from Neutral and raised his price target on the stock to $175.

Shares extended gains from the previous session, when it jumped 7% after the company unveiled a new AI partnership with Nvidia (NVDA) focused on government and other security-sensitive customers.

"Palantir has grown into its valuation as profits have soared, and the multiple has come in, providing investors with a gift just in time for the United States of America's 250th birthday," Luria wrote on Thursday morning.

"We believe Palantir's valuation is the most attractive it has been in a while, especially in relation to other high-growth software companies," he added.

Luria noted that while Palantir now trades in line with other AI-focused software companies such as Snowflake (SNOW), Shopify (SHOP), Datadog (DDOG), and CrowdStrike (CRWD), "it is growing twice as fast as any of them."

Luria said recent developments reinforce a key advantage of Palantir's orchestration tool โ€” the ability to switch between AI models with minimal disruption.

"Anthropic's repeated choice to take a confrontational tact with the US government has resulted in the government placing restrictions on AI models and Anthropic pulling its own model from the market," Luria wrote.

"If an enterprise customer built its business directly on top of these models, the disruption to their business could have been catastrophic," he added. "In contrast, a company that built its business on an orchestration tool, such as Palantir, would only experience a minor transition as Palantir swaps the AI models underneath its solution."

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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