Mizuho Securities upgraded Palantir Technologies to Outperform on Tuesday and set a price target of $195. Analyst Gregg Moskowitz said the data analytics company holds a unique competitive position, marked by both strong revenue growth and margin expansion, which he described as unprecedented in enterprise software.

The upgrade comes after Palantir’s stock dropped more than 25% this year, far worse than the Nasdaq Composite’s 2.9% decline. Moskowitz, who had earlier warned about valuation risks, now believes the selloff is mostly over and sees better opportunities for buyers.

The recent drop in Palantir’s stock reflects wider challenges in the software sector and less enthusiasm for artificial intelligence as an investment theme. This is a tough situation for Palantir, since its products are built around AI-powered analytics and surveillance. Its main product, the AI Platform, uses large language models within enterprise data systems to automate workflows.

Moskowitz, however, thinks the broader pessimism is not justified. He points to faster adoption in real-world settings as proof that enterprise customers are seeing real benefits, showing that demand is based on actual needs rather than speculation.

Central to his constructive outlook is the trajectory of Palantir’s domestic commercial business, which now represents a key reason for his positive view. The growth of Palantir’s U.S. commercial business, now making up 36% of total revenue, up from 26% last year, is a key reason for his positive view. Management expects this segment to grow by more than 115% this year, and Moskowitz thinks this target may be too low. National defense demand has also shown resilience, with the United Kingdom emerging as a notable growth market despite broader fiscal caution across the continent. Moskowitz projects government revenue growth will hold above 40% annually over the next two years, supported by an active contract pipeline and an increasingly volatile geopolitical backdrop.

After the upgrade, 17 analysts tracked by FactSet now rate the stock as Buy or equivalent. Eleven have a Hold rating, and two recommend selling.