Palantir (PLTR) stock is climbing 4% today after investment bank Wedbush predicted that the company's revenue from the federal government could increase "over the next year," despite Washington's cost-cutting efforts.

Wedbush's Bullish Take on PLTR

After speaking with sources inside the federal government, Wedbush analysts, led by the well-known Dan Ives, wrote that "we believe Palantir could actually gain more deals and IT budget dollars across various government agencies." The analysts also contended that "the efficiency focus of the DOGE initiatives could be a major coup (with Washington) for the likes of Palantir over the next year." More specifically, Palantir's focus on AI should help it obtain a greater share of the Pentagon's budget going forward, the investment bank believes.

Further, Palantir is involved in many initiatives that will not get axed because of their "high priority" for the Defense Department, according to Wedbush.

The investment bank kept a $120 price target and an Outperform rating on the shares.

More Information About Palantir

Analysts on average expect the company's earnings per share to climb to 56 cents this year from 41 cents in 2024. The shares are changing hands at a forward price-to-earnings ratio of 147 times.

While we acknowledge the potential of PLTR, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PLTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.