Palantir’s stock is heading for its best day ever as the bear camp gets smaller

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Palantir Technologies Inc. quieted some bears with its latest results, which were helping to send its stock soaring toward its best day on record.

At least two formerly bearish analysts moved to neutral positions on Palantir’s stock

following Monday afternoon’s earnings report, as they acknowledged momentum in the company’s U.S. commercial business, which has seen a boost from artificial-intelligence applications.

“U.S. Commercial strength [is] getting harder to ignore,” wrote Citi Research analyst Tyler Radke.

While he noted that Palantir only topped total revenue expectations by 1%, Radke saw “exceptionally strong” leading indicators like 54% year-over-year growth in total billings, admittedly against what he deemed easy comparisons.

“Perhaps more impressive was the continued profitability strength,” Radke added, noting that earnings per share came in 35% above the consensus view, while free cash flow was 62% above estimates for the fourth quarter.

He upgraded Palantir’s stock to neutral from sell Tuesday, while doubling his price target to $20.

See also: Palantir’s CEO has this message for skeptics and believers alike

Palantir’s stock was ahead 27% in Tuesday morning action and on track to log its best one-day percentage gain on record.

Jefferies analyst Brent Thill also abandoned his bearish stance.

“We are impressed with AI Platform (AIP) ramping faster than our initial expectations and believe it’s appropriate to upgrade shares to reflect the momentum,” he wrote, as he moved to a hold rating from his prior underperform recommendation.

Thill sees Palantir at an “inflection point” given deal momentum for AIP, though he continues to have valuation concerns, noting that the stock trades at a sizable premium to other large-capitalization software names.

BofA Securities analyst Mariana Perez Mora cheered the latest results, writing that AIP “is still in its infancy and already contributing in a meaningful way.”

She highlighted that Palantir’s U.S. commercial business saw a 70% boost in revenue during the latest quarter. “This remarkable growth is a sign of Palantir’s unique position as an enabler of AI-powered data-driven decision making in a tangible, accessible, and operational way,” she wrote, while sticking with a buy rating and upping her price objective to $24 from $21.

William Blair’s Louie DiPalma stayed bearish, however, predicting that shares would “resume their recent downward trend after this earnings pop.”

He noted that Palantir’s U.S. commercial business represents only about a fifth of total revenue, and in his view, “the other divisions continue to struggle.”

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