Mackenzie Tatananni

Palantir Technologies could become a "core winner" in the trillions of artificial-intelligence spending over the next few years, Wedbush analysts wrote as they raised their price target on shares of the software company.

Palantir stock was up 0.8% to $77.50 on Thursday. Wedbush analysts led by Dan Ives raised their price target to $90 from $75 and maintained an Outperform rating. The new target implies 16% upside.

While the valuation is expensive today, Palantir "has a path to become the next Oracle or Salesforce over the coming years," the analysts wrote. Their bull thesis is rooted in the company's AI strategy, with Palantir seeing "unprecedented demand" for its AI platform from both commercial and federal clients.

In particular, Palantir's "enhanced product portfolio of advanced AI capabilities" continues to gain traction across various government agencies, the analysts said.

"To this point we believe the Trump administration represents an additional tailwind," the analysts wrote, nodding to the recently unveiled Project Stargate initiative. "In essence, Palantir is in the sweet spot to benefit from a tidal wave of federal spending on AI."

Elsewhere, William Blair rates Palantir stock at Underperform, but the firm has seen renewed interest from the company's government clients, with a focus on IT modernization.

In a Tuesday note, analysts said they expected Palantir to be added to the Department of Defense's Advana data stack soon.

Advana, a data-analytics platform designed by competitor Booz Allen, makes it easier to share data between agencies. Another peer, Databricks, "plays a major role" in the existing stack, the William Blair analysts wrote.

Palantir shares had a blockbuster 2024, rising 340% for their best annual performance yet. However, Wall Street remains split, with some analysts pointing to a stretched valuation.

Out of 23 analysts who cover Palantir stock, two have Buy or equivalent ratings, eight have Sell ratings, and 12 are neutral on the stock, according to FactSet.

Wedbush's Ives has been a consistent bull. Reiterating an Outperform rating earlier this month, Ives argued that Palantir was poised to capitalize on a significant boost to AI spending within IT budgets.

Meanwhile, Jefferies analysts rate Palantir stock at Underperform with a $28 price target. They argued in a note last week that "negative factors" such as changing interest rates and insider selling could cause its multiple to compress further.

Similarly, Morgan Stanley analyst Sanjit Singh rated the stock at Underweight and set a $60 price target when he assumed coverage last month.

While Singh acknowledged the role Palantir's AI platform played in accelerating growth, the firm sees success "more than priced in at the current multiple premium," he said.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

January 23, 2025 10:22 ET (15:22 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.