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Palantir Technologies (PLTR) has a reputation for assisting governments, military contractors, and big businesses in deciphering complex data.

It now aims to assist businesses in selecting which ads you see.

Marketing company Stagwell (STGW) expanded its partnership with Palantir on Oct. 22, putting Palantir’s artificial intelligence technology inside products used to build audiences, analyze consumer sentiment and plan, optimize and measure advertising campaigns.

With this partnership, Palantir enters a whole new area of corporate America.

Stagwell has already framed the partnership as a sizable revenue opportunity.

Mark Penn, CEO of Stagwell, said that the Palantir-powered technology might potentially generate hundreds of millions of dollars in additional income for his firm when the companies originally announced their agreement in November 2025.

Stagwell says the expanded agreement includes Palantir technology in its AI marketing products.

The importance to Palantir investors extends beyond advertising.

In its most recent reported quarter, Palantir’s U.S. commercial sales increased 149% year over year.

Finding new companies where its AI software can be integrated into regular operations is necessary to maintain that growth rate.

One of them may be marketing.

Palantir wants to become part of how companies sell

There is considerably more to the expanding Stagwell connection than just making commercials.

Four Stagwell systems will use Palantir’s technology:

Machine OS connects workflows, personnel, and marketing tools.

The Knowledge Machine converts consumer sentiment data into choices.

The Audience Machine generates targetable audience groups and client profiles.

Additionally, the Media Machine employs AI agents to assist in the planning, optimization, and measurement of advertising campaigns across many platforms.

Stagwell says Palantir’s software will connect product data and workflows without requiring clients to switch technologies.

That difference is crucial.

A big business may have sales data in one system, advertising data in another, and customer information in a third.

Palantir argues that its software can link such systems and allow AI to act on the data without requiring the business to give up control of its data to a single closed platform.

Palantir already provides comparable products to manufacturers, hospitals, and military firms.

Related: Palantir stock faces brutal test after crushing expectations

The data is not the same.

It’s not the fundamental issue.

The November 2025 agreement originally paired Palantir Foundry with Stagwell’s marketing data and software to create a central platform for marketing and advertising decisions.

Penn referred to the concept at the time as the “holy grail of marketing.”

More significantly for investors, Stagwell planned to offer the platform on its own instead of only to current agency customers.

Stagwell has already put money behind the Palantir bet

This collaboration is no longer only exploratory.

The Palantir-powered marketing system has already landed two proof-of-concept contracts and one $5 million complete deployment, according to a statement made by Stagwell earlier this year.

Additionally, the corporation was developing a version targeted at small and medium enterprises.

According to a Stagwell earnings-call transcript, Penn said the company wanted the platform to become a new business line capable of producing potentially hundreds of millions of dollars in revenue.

That goal has not yet been accomplished.

However, the plan has a wide distribution network because of Stagwell’s current company.

The corporation made $2.9 billion in sales in 2025 and has over 55 agency partners.

Additionally, its digital transformation division is expanding more quickly than the corporation as a whole.

While overall net sales grew by 5% organically, digital-transformation net revenue grew by 18% in the second quarter.

Stagwell reported $786 million of second-quarter revenue, up 11% from a year earlier.

Stagwell also combined its AI capabilities under a new Stagwell AI brand two days prior to announcing the larger Palantir agreement.

According to the firm, rather than replacing their entire marketing stack, the portfolio is designed to enable companies to add certain AI technologies to the technology they currently use.

Palantir is one of the technology partners behind that strategy.

That gives Palantir something valuable: another route into large corporate customers without having to sell every deployment alone.

Palantir’s AI expansion is reaching an unlikely marketFinn Gomez / Getty Images

Palantir’s commercial business needs more markets like this

For the Stagwell connection to be significant, Palantir does not require advertising to grow into its major business.

Palantir needs more instances of its software being used in corporate settings where businesses spend significant sums of money annually.

Marketing qualifies.

Palantir’s second-quarter U.S. commercial revenue rose 149% to $764 million. It closed a record $2.13 billion in U.S. commercial total contracts during the quarter, up 153%. Total sales rose 93% to $1.94 billion. Palantir expects U.S. commercial revenue to exceed $3.42 billion in 2026, a 134% increase.

Those numbers create a difficult comparison for future quarters.

Palantir cannot continue to depend solely on a limited number of clear AI use cases.

It must continuously identify new divisions, sectors, and processes where clients feel its software generates sufficient value to support contract expansion.

More Palantir:

Palantir’s latest AI move reveals a much bigger ambition

Palantir faces a $330 million test U.S. investors should watch closely

UBS resets Palantir stock price target for the rest of 2026

Stagwell provides investors with an illustration of how that may occur.

However, there is also a significant drawback.

Neither Palantir nor Stagwell revealed the extended Oct. 22 partnership’s financial terms.

There is no public breakdown of how much of Stagwell’s hundreds of millions of dollars in income would eventually go to Palantir, and it is Stagwell’s goal, not Palantir’s.

AI marketing is also becoming crowded.

Palantir is not the only AI supplier vying for a spot in corporate marketing departments since Stagwell itself collaborates with other major IT firms like Adobe and ServiceNow.

Adoption is therefore the key metric to watch.

It’s helpful to have another collaboration announcement.

It would be far more crucial to make additional $5 million deployments.

Palantir has previously shown that businesses will handle complicated supply chains, industries, hospitals, and military projects using their software.

If Stagwell can transform the same architecture into something that marketers can afford at scale, Palantir will have demonstrated something more comprehensive:

Its future business market may not have to resemble its last one at all.

Related: Palantir hits record as its next AI market gets awkward

The S&P 500 has spent much of this bull market rewarding investors who embraced technology, large-cap stocks, and growth investing. That makes a turn toward healthcare seem, at first glance, like a retreat into safety.

Sam Stovall, chief investment strategist at CFRA Research, sees a different case: Healthcare may offer investors both a defensive cushion and faster projected earnings growth than the broader S&P 500 in 2027.

Stovall sat down with TheStreet’s Caroline Woods to make his case for the industry.

In an expensive market, the distinction between a defensive play and chasing growing earnings is an important one. Stovall says the current bull market is the most expensive among bull markets that reached a fourth anniversary since World War II. Yet he also notes that the S&P 500’s forward P/E ratio, a stock-price measure relative to expected earnings over the coming 12 months, fell to below 20 from 23.3 at the start of 2026 as earnings grew faster than anticipated.

In his view, that earnings improvement gives investors reason to stay invested, while becoming more selective about where they add money.

For Stovall, healthcare fits that more selective approach. He favors it over consumer staples, sees continued opportunity in technology and energy, and argues that the broader market’s direction will depend more on earnings than on whether market leadership becomes perfectly broad.

Here is how his healthcare case fits into a cautious but still constructive outlook for stocks.

Note: The market musings expressed herein are those of the interviewed guest and should not be treated as professional investment advice. Readers should consult a certified financial planner (CFP) for individualized advice based on their available capital, goals, risk tolerance, and time horizon.

Why healthcare can offer both growth and defense in 2027

The core of Stovall’s call is earnings. CFRA Research’s 2027 estimates put healthcare earnings growth at about 22%, compared with 16.8% for the S&P 500 at large. Forecasts are not guarantees, though, and projected earnings can change as companies report results.

Still, the comparison explains why Stovall sees a more compelling setup in healthcare than in a sector chosen solely to protect against market volatility.

Healthcare is commonly treated as a defensive sector because demand for many medical products and services is considered less sensitive to economic changes than demand for cyclical goods.

Stovall’s argument does not rest on defensiveness alone, though. He says projected earnings improvement, recent price momentum, and the sector’s historical performance in U.S. midterm election years all support CFRA Research’s bull case on the sector for the coming year.

Here’s a group that in a sense has some growth opportunities ahead, but is also known as being a defensive sector. So it might look good under either scenario.
Sam Stovall, when asked why he would choose healthcare as his one opportunity for the rest of the year and into 2027

Stovall’s point is counter to the usual split investors make between growth sectors and defensive sectors. Technology is often bought for growth, while healthcare is often bought when investors want shelter. His thesis is that healthcare could appeal in either environment: It could benefit if earnings expectations stay firm, and it could be relatively resilient if worries about rates, debt, or economic growth intensify.

Stovall said CFRA Research had upgraded some individual stocks, naming Cardinal Health as one example it favored for growth potential and defensive characteristics. Investors considering any sector should still examine a company’s earnings outlook, valuation, balance sheet, competitive position, and the role the stock would play in their portfolios.

Why consumer staples are a different kind of defensive trade

Healthcare’s appeal becomes clearer when compared with consumer staples. Staples, which include companies tied to everyday household goods and food, had climbed nearly 9% in October when Stovall spoke. Healthcare and utilities were each up almost 7%. That kind of leadership can signal that investors are looking for safety, particularly after a sudden scare in a more speculative corner of the market.

Stovall said investors were spooked by news about Coreweave’s debt, contributing to a rapid shift out of AI and into bonds and defensive sectors. The 10-year yield fell by 14 basis points in a single day, according to his account. (A basis point is one-hundredth of one percentage point, so 14 basis points equals 0.14 percentage points.)

But Stovall does not treat consumer staples as equivalent to healthcare. He said tariffs, fertilizer costs, and the potential effect of GLP-1 drugs on food groups were among the pressures facing staples companies.

He also said some companies were reducing volume in an effort to improve profit margins. That makes staples, in his view, more of a safety trade than a source of strong earnings growth.

I think it’s primarily a safety trade at this point and not one that will be offering a lot of good earnings growth.
Sam Stovall, when asked whether he likes consumer staples after the sector’s year-to-date strength

Stovall’s distinction gives investors a practical way to think about defensive rotation, a shift from economically sensitive investments to sectors viewed as steadier. A move into staples can reflect caution.

A move into healthcare may also reflect caution, but Stovall believes healthcare has an additional earnings argument. Investors who already hold defensive stocks may want to ask whether they are paying for stability alone or for stability paired with an earnings outlook they find credible.

Why Stovall still favors technology alongside healthcare

Healthcare is Stovall’s top single opportunity, but it is not a call to abandon the artificial intelligence trade or technology stocks more broadly. He notes that technology accounts for 40% of the S&P 500, and that the share rises above 50% when technology-oriented companies in communication services and consumer discretionary are included. That concentration helps explain why technology earnings and valuations remain central to the market’s outlook.

His valuation case for technology is relative rather than simplistic. Stovall said technology was trading at a discount to its own earnings history over the prior five and 10 years, and at a discount to the S&P 500 relative to its history over five, 10, and 20 years. He also said CFRA Research expected technology earnings to rise by more than 30% in 2027.

Those figures do not mean technology is cheap by every measure, or that the sector is immune to disappointment. Stovall explicitly said investors should question the artificial intelligence trade rather than put it on autopilot.

His conclusion was narrower: Recent pressure in technology, following concerns about Coreweave, did not justify treating all technology companies as a single trade or exiting the sector too quickly.

Even though we did recently have a concern with Coreweave, you have to look individually at many of the tech stocks. But when you have a sector itself be as low as tech is, I don’t think you want to bail out too soon.
Sam Stovall, when asked whether investors should rotate out of big technology stocks after pressure on the Artificial intelligence trade

Stovall’s framework leaves room for both healthcare and technology in a portfolio. Healthcare is his preferred choice for investors seeking a blend of projected growth and defense. Technology remains a longer-term buying opportunity in CFRA Research’s view, based on projected earnings and valuation relative to its own history.

The appropriate balance depends on an investor’s time horizon, risk tolerance, existing exposure to large-cap stocks, and willingness to accept technology’s sharper swings.

How midterm-election history shapes Stovall’s sector view

Stovall repeatedly emphasizes that history is a guide rather than gospel. His optimism about healthcare, energy, technology, and communication services partly reflects an unusual feature of this U.S. midterm election year: The market showed strength in the second and third quarters, periods he said have historically been negative. He said that, going back to 1990, a positive third quarter has been a reason to let winning sectors continue to run.

Healthcare, energy, and technology were the three best-performing sectors in the third quarter, with communication services fourth, according to Stovall. He also said those four sectors had the strongest net debt-to-EBITDA profiles. Net debt to EBITDA compares a company’s debt, after cash, with a measure of operating earnings. Lower figures generally indicate less debt relative to earnings. Stovall sees that as an advantage if higher interest rates become a larger concern.

His historical data also support the momentum case. Stovall said that the three best-performing sectors from March 31 of a midterm election year through the end of October beat the market by an average of 500 basis points over the following 12 months, and did so nearly 80% of the time. He added that the period from October 31 of midterm election years through October 31 of the following year had never declined since World War II and posted an average 16% gain.

The limits of that evidence matter. Historical patterns can be informative without being predictive, especially when the number of comparable periods is small. Stovall made that qualification himself when discussing political outcomes.

He said a Republican president with both houses of Congress controlled by the same party, a red wave, had produced a gain of more than 13% since World War II, but there were only 10 observations, which he said a statistician would not consider significant.

Stock market sectors favored by CFRA Research for 2027

SectorStovall’s rationaleMain caveatHealthcareProjected 2027 earnings growth of about 22%, defensive characteristics, momentum, and midterm-election historyEarnings estimates and historical patterns can change or fail to repeatTechnologyProjected earnings growth through 2027 and valuation below its historical relationship to earningsIndividual companies should be evaluated separately after Artificial intelligence trade concernsEnergyAmong the strongest recent sectors and expected to have especially strong earnings growthSector performance can be sensitive to energy prices and changing economic conditionsConsumer staplesCan provide defensive exposure during a safety tradeStovall expects limited earnings-growth support

What could challenge the bull market and the healthcare case?

Stovall remains bullish, but his outlook is not a forecast of uninterrupted gains. He identified disappointing earnings as the bigger threat to stocks than higher interest rates because elevated earnings expectations are supporting valuations. If corporate results fail to meet those expectations, the market could reprice itself even if bond yields remain manageable.

He also pointed to high debt levels, including $40 trillion in government debt and retail margin debt (money borrowed by investors) relative to M2 (a measure of money supply) at an all-time high. High leverage can amplify selling when markets fall because borrowers may need to sell assets to meet lending requirements.

On interest rates, Stovall said the pace of a rise in the 10-year yield mattered more than the level alone. He said he would become more concerned if the yield rose into a range of 5.25% to 6%, alongside several Federal Reserve rate increases over a short period. Even then, he cited 1994, when seven rate increases over 12 months doubled the Fed funds rate while the S&P 500’s peak-to-trough decline was less than 9%.

That example is a reminder that a pullback and a bear market are different events. A correction is commonly understood as a decline of at least 10% from a recent peak, while a bear market is commonly understood as a decline of at least 20%. Stovall’s 1994 reference described a smaller pullback, not a correction or bear market.

Investors should avoid treating one historical episode as a template for a future market response.

The takeaway for investors considering healthcare in 2027

Stovall’s healthcare preference is best read as a decision framework rather than a command to make an all-or-nothing bet on the sector.

For long-term, buy-and-hold investors, the first question is whether a healthcare allocation would improve diversification in a portfolio already dominated by technology, large-cap stocks, or other growth investments. The second is whether the investor agrees that healthcare’s projected earnings growth and defensive characteristics justify the price of the companies being considered.

For investors who already own healthcare, Stovall’s argument supports reviewing whether the position still matches its intended purpose. A healthcare holding purchased only for defense may have a different role than one purchased for an earnings-growth opportunity. For investors adding exposure, diversification across companies may reduce the risk of relying on a single firm’s earnings report, regulatory developments, or operational setbacks.

Stovall’s broader message is cautious optimism. He expects the bull market to continue but believes the trajectory of gains should slow to a mid- to high-single-digit advance for 2027.

Healthcare stands out in his view because it does not require investors to choose entirely between offense and defense. Whether that combination proves attractive will depend on earnings results, valuations, interest rates, and the market’s appetite for risk. The practical task for investors is to decide whether the sector’s projected growth and defensive profile fill a genuine gap in their portfolios, rather than simply chasing the latest winner.

Stovall’s case for healthcare is a selective one: He sees a sector with projected earnings growth above the S&P 500’s, defensive characteristics, and historical support in a midterm-election year.
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