Palantir short sellers lose $3 billion as AI-fuelled rally ignites

Palantir Technologies has handed short sellers a $3 billion paper loss after its stock surged 30% on Tuesday, wiping out the roughly $2.7 billion in gains bearish investors had banked so far this year. The reversal followed Palantir's decision to raise its full-year revenue and income forecasts, with chief executive Alex Karp pointing to strong commercial demand. Even so, the shares remain down more than 8% for 2026, and some analysts still question a valuation of over 83 times forward earnings. There is no direct South African angle to this story, though local investors with offshore or global tech exposure will feel the swings indirectly..By Carmen Reinicke.Palantir Technologies Inc.’s stock surge has wiped out all of the year-to-date paper gains for short sellers, saddling them with billions in losses. Investors betting against the software defense company have accumulated paper losses of $3 billion with the stock up 30% Tuesday, according to data from S3 Partners LLC. The cohort is now in the red for the year as shares are poised for their best daily performance in two years. The reversal of fortunes comes after Palantir boosted its full-year revenue and income forecasts on Monday. The stronger outlook fueled a rally in shares that put an end to short sellers’ positive run. Prior to Monday’s close, the stock’s sluggish performance had minted short sellers a paper gain of about $2.7 billion year to date..Despite the surge, Palantir shares are stll down more than 8% so far this year, on track for their worst annual performance since 2022. Investor Michael Burry of The Big Short fame in November disclosed bearish wagers on Palantir and Nvidia Corp., helping to kick off a prolonged slip in Palantir shares. In June, Burry said in his Substack newsletter that he covered half of his short position in Palantir. Meanwhile, some analysts remain cautious on the company given its sky-high valuation. Palantir shares trade at more than 83 times forward earnings, a hefty premium to the broader market. “We are fundamental fans, but the setup gets harder from here,” Jefferies analysts led by Brent Thill wrote in a note, maintaining an underperform rating, adding that they see better risk versus reward in other AI winners including Microsoft Corp., Amazon.com Inc. and Snowflake Inc. Still, some investors’ fears were allayed when Palantir Chief Executive Officer Alex Karp said Monday that commercial demand for the firm’s data analytics tools is “otherworldly.” They were concerned that tools from AI developers such as Anthropic PBC could hurt the company’s software business.Palantir even gained a new Wall Street bull in Deutsche Bank analyst Brad Zelnick following the full-year forecasts. Zelnick upgraded shares to buy from hold and maintained a $200 price target, saying that following another beat and raise quarter, Palantir deserves its premium valuation. Nearly 70% of analysts covering the company rate it a buy, according to data compiled by Bloomberg. .Read more:.BN Portfolio: Palantir shares surge as CEO Karp calls demand "otherworldly".“Palantir is operating several steps ahead of the rest of software in converting AI demand into real customer value,” Zelnick said in a note. “As much of application software is still trying to prove AI is truly incremental, Palantir increasingly looks like a time traveler, having already arrived in the AI future others are still aspiring towards.”.© 2026 Bloomberg L.P..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here

Palantir short sellers lose $3 billion as AI-fuelled rally ignites

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