Palantir rises 5%, Cloudflare gains 3% as peace deal lifts AI stocks

A U.S.-Iran peace deal announced Sunday triggered a broad rally Monday, lifting AI and security software stocks that had lagged this year.

Palantir Technologies Inc. rose 5% to about $134 in midday trading, while Cloudflare Inc. gained 3% to near $235, as investors rotated into high-beta growth names. The Invesco QQQ Trust, tracking the Nasdaq 100, advanced 3%, and the SPDR S&P 500 ETF Trust gained 1.9%, confirming the breadth of the bid across major indexes.

"The peace deal removes a significant geopolitical overhang that had kept defensive positioning elevated," said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. "Investors are rotating back into AI and security software names that had been under pressure this year."

Palantir, which carries a beta of 1.5 and trades at 88 times forward earnings, has been one of the most direct beneficiaries of the AI infrastructure buildout. Its AIP platform powers government and commercial AI deployments, while Cloudflare's edge network and zero-trust security layer increasingly carries agentic AI traffic. Cloudflare's beta of 1.7 makes it even more sensitive to macro shifts — both names tend to amplify directional moves in the broader market.

The rally comes inside a difficult year for Palantir. The stock remains down 24% year to date and trades well below its 200-day moving average of $160.42, despite reporting 85% year-over-year revenue growth in the first quarter. The company posted $1.63 billion in revenue for Q1 2026, beating the $1.54 billion consensus by 6%, with earnings per share of $0.33 topping estimates by nearly 14%. Analysts project full-year 2026 revenue of $7.69 billion, up 72% from a year earlier, and EPS of $1.49, nearly doubling year over year. The Zacks Rank assigns Palantir a #2 (Buy) rating, suggesting the stock may outperform the broader market in the near term.

Cloudflare, meanwhile, has fared better year to date, up about 20% as the company pivots toward agentic AI infrastructure. The stock's forward P/E of 189 times reflects the premium investors assign to its edge-network positioning, though it also leaves less room for execution missteps.

The next test for the group comes later this week, when Federal Reserve rate decisions and any shifts in Treasury yields could determine whether the rotation has staying power. For now, the peace deal has given investors a reason to buy the dip in two of the most high-conviction AI names.

This article is for informational purposes only and does not constitute investment advice.