Palantir Technologies' (PLTR) deal with the North Atlantic Treaty Organization, or NATO, represents an additional boost for the company, with artificial intelligence initiatives gaining momentum across both US and European governments, Wedbush Securities said in a note Monday.

The company has been selected by NATO to provide its AI-driven Maven Smart System, which is designed to improve data analysis, intelligence fusion, targeting, battlespace awareness, planning, and decision-making on the battlefield.

Analysts, including Daniel Ives, said that despite recent concerns over defense spending and Palantir's stock dip, they believe the company's "unique" software will help it capitalize on the growing demand for AI. Palantir is well-positioned to handle sensitive workloads, giving it an edge to gain more market share in the US Federal market as the government increasingly relies on it for efficiency, especially with the Department of Government Efficiency, or DOGE, remaining relevant.

The analysts said they believe this deal gives Palantir "an additional tailwind" as AI initiatives accelerate in both the US and Europe.

Palantir is "in the sweet spot to benefit from a tidal wave of federal spending on AI across North America and Europe," the Wedbush analysts said, adding that the company "is well positioned for this new disciplined spending environment and this will ultimately be a positive growth catalyst as Karp & Co. get a bigger seat at the table globally."

Wedbush is keeping its outperform rating and $120 price target on the stock.

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