Palantir Technologies (PLTR, Financials) is up 85% year to date as rising Middle East tensions spotlight its expanding role in defense intelligence. The software firm's battlefield decision-making tools and government contracts are drawing investor interest, with analysts debating whether the rally still has legs.
The recent conflict between Israel and Iran has intensified demand for AI-driven military solutions; Palantir is already a known partner of Israel's defense ministry and a key U.S. government contractor. In Q1 2025, the company reported 39% revenue growth, led by a 55% jump in U.S. sales. Its commercial U.S. business also crossed a $1 billion run rate for the first time.
Still, Palantir's valuation is a sticking point; its forward price-to-earnings ratio stands at 240—ten times the sector median. While Loop Capital raised its target from $130 to $155, calling the company a “software leader” in enterprise AI, Citi warned of overvaluation and pointed to uncertainty around major defense deals.
Wall Street remains divided. The stock holds a Hold consensus based on 3 Buys, 10 Holds, and 4 Sells. The average price target is $104.27, implying a 25.5% downside.
