Palantir Stock Is Soaring Today. Here's Why.

Shares of Palantir Technologies (NASDAQ:PLTR) are surging on Thursday. The artificial intelligence (AI)-powered data analytics company's stock gained 8.1% as of 1 p.m. ET and was up as much as 9% earlier in the day. The jump comes as the S&P 500 (SNPINDEX:$SPX) gained 1.5% and the Nasdaq Composite (NASDAQINDEX:$NASX) rose 2%.

The government-focused software provider is rallying after President Trump announced a trade agreement with the United Kingdom.

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Investors are hoping it's the first deal of many

Palantir shares climbed as President Donald Trump unveiled the broad outline of a trade agreement with the United Kingdom. This is the first major deal his administration has been able to put together after Trump imposed sweeping tariffs in April.

While optimism was high following the announcement, it's important to note that many specifics remain unclear, and nothing was formally signed. "The final details are being written up," Trump said. "In the coming weeks, we'll have it all very conclusive."

A boost for Palantir

While the news boosted stocks across the market, Palantir investors appeared especially optimistic, as some of the limited specifics mentioned could benefit the company specifically. The White House fact sheet released as part of the announcement mentions the deal will "close loopholes and increase U.S. firms' competitiveness in the U.K.'s procurement market." This could mean Palantir has an easier time winning new contracts with the U.K. government.

Image source: Getty Images.

Palantir is still overvalued

With a price-to-earnings ratio (P/E) of nearly 500, Palantir's valuation is out of touch with reality. There is no doubt that the company is executing at a very high level, but with a valuation this high, a level of perfection is required that I don't think is possible to sustain long term. I would stay away from Palantir stock.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.