Geopolitical conflicts often result in a rally across the aerospace and defense industry, but seldom do they cause a software stock to trade against the trend. Yet that's undoubtedly what happened with Palantir (PLTR) stock, which gained 15% during the last week. What makes it even more fascinating is that this came at a time when software stocks are hurting due to AI developments.
While President Trump has dubiously claimed the Iran war is already coming to a conclusion, stakeholders know things are not that straightforward. Iran’s decision to target U.S. military installations in neighboring countries, along with leveraging the Strait of Hormuz traffic, has made one thing clear: the regional political temperature is not going down anytime soon, even if U.S. military strikes stop.
This is precisely where Palantir becomes relevant. Palantir’s unique moat in its “Ontology” (which it describes as a “tool factory” for AI and human agents) and its role in battle planning and target identification mean it could win a lot more government contracts even if the military's role becomes passive in nature in the coming weeks.
About Palantir Stock
Palantir is a data analytics and AI company that serves both commercial and government clients through its various platforms. The company is led by Alex Karp and is headquartered in Miami, Florida.
PLTR stock has doubled in the last 12 months, despite being down nearly 16% year-to-date (YTD). The S&P 500 ($SPX) has been essentially flat so far this year. For a stock that has significantly outperformed the benchmark index in the last couple of years, this year so far certainly seems an outlier.
The stock currently trades at a non-GAAP forward P/E ratio of 118.35x. A consensus earnings growth rate of 75% in 2026, 40% in 2027, 43% in 2028, and 63% in 2029 justifies that premium. Palantir also has negligible debt at $412 million, which is insignificant compared to its cash pile of over $7 billion. Gross margins of 82% are quite healthy, and even though net margins stand significantly lower at 36%, they will improve as the company scales its operations. The company has a free cash flow of $2.1 billion.
Palantir Stock Rises After Q4 Earnings
The company’s stock spiked after its Q4 earnings report on Feb. 2. It reported an EPS of $0.25 vs. expectations of $0.23 and revenue of $1.41 billion compared to $1.33 billion expected by Wall Street.
CEO Alex Karp called the result the best he has seen in the last decade among all technology companies. He noted that U.S. government revenue grew by 66%, great numbers that are likely to be repeated over the course of the next few quarters as AI becomes more ingrained in the United States’ military infrastructure. During the quarter, Palantir’s customer count grew 34% year-over-year (YoY), with net dollar retention at 139% compared to 134% in the previous quarter.
The CEO also mentioned that the demand from the U.S. government is so strong that the company is holding off on selling new products to other friendly governments. International commercial revenue looks stagnant for now, growing only at 8% YoY. The firm carries a high concentration and geographic risk. However, considering the fact that it is becoming an integral player in America’s military infrastructure, this is not surprising.
What Are Analysts Saying About PLTR Stock?
Since the Q4 earnings report, analysts have reiterated their ratings and, in some cases, even increased the price target on PLTR stock. Rosenblatt Securities increased its target price on Palantir from $150 to $200 on March 3. UBS also upgraded the stock to a “Buy” on Feb. 27.
PLTR stock now has 15 “Strong Buy” ratings as opposed to 10 just one month ago. This renewed optimism could help the ongoing rally continue, especially considering the fact that the stock is still trading 28% off its 52-week high.
On the date of publication, Jabran Kundi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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