Palantir (NASDAQ: PLTR) is exhibiting strength as investors react positively to Wall Street’s latest endorsement of the company’s role as a key Department of Defense contractor.
As of press time, PLTR stock was trading at $90.18, gaining over 6% since the last trading session.
These gains have partly erased Palantir’s recent losses, which saw the American software giant lose the $100 support zone. On the weekly timeframe, the equity is down 0.7%.
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PLTR stock’s Wall Street update
The renewed PLTR strength can be viewed as investors’ reaction to Wedbush Securities’ rating the stock as its top pick for 2025.
In this case, the firm’s Dan Ives on March 3 reiterated his ‘Outperform’ rating and maintained a $120 price target on the AI stock.
Despite market volatility and concerns over high valuation, Ives sees the recent sell-off as a buying opportunity for long-term investors. He highlighted Palantir’s trillion-dollar market cap potential as AI adoption accelerates across industries.
Indeed, part of Palantir’s recent losses were triggered by news that Donald Trump’s administration planned to cut the Department of Defense budget. Given that the government serves as a vital customer base for the firm, any DoD budget reductions could impact Palantir’s future revenue.
Now, the Wedbush analyst stated that Palantir’s high-priority contracts are unlikely to be impacted by defense budget cuts. He highlighted that increased AI investments under the Trump administration, particularly through Project Stargate, should further boost the company’s growth.
“The efficiency focus of the DOGE initiatives could be a major coup for the likes of Palantir over the next year. <…> Palantir could actually gain more deals and IT budget dollars across various government agencies and ultimately further entrench PLTR in the FY25 and FY26 federal budget cycle,” Ives said.
According to Ives, after reviewing recent developments in Washington, D.C., his analysis indicates that Palantir stands to benefit from the Pentagon’s increasing push into AI-driven technologies.
In this regard, Ives stated that Palantir aligns well with the U.S. Department of Defense’s efficiency-focused initiatives. Additionally, with potential legislative changes under Trump, the company’s involvement in critical military projects could support ongoing contract growth.
Concerns over PLTR stock’s valuation
While Ives extended his bullish stance on Palantir, not all analysts agree. As reported by Finbold, Jefferies’ Brent Thill set a target of $60 for Palantir on February 19—half of the projection by Wedbush.
With an ‘Underperform’ rating on PLTR, Thill raised concerns regarding the stock’s valuation, warning that its meteoric rise does not match its fundamentals.
At the same time, the analyst warned that Palantir’s sluggish hiring could be signaling a slowdown in AI demand for its products.
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