Palantir Technologies distinguished itself in an otherwise challenging week for the broader stock market, witnessing a significant stock surge of 15% following the recent military actions in Iran. In contrast, the tech-heavy Nasdaq composite index experienced a decline of 1.2%, influenced by downturns in major technology firms like Apple, Google, and Micron. Market sentiment worsened with rising oil prices and an unexpected jobs report indicating a contraction in the U.S. economy for February.
Investors have increasingly turned their attention to Palantir, a company that derives approximately 60% of its revenue from government contracts. With President Donald Trump’s administration appearing to engage in a prolonged military conflict in Iran, the anticipation of increased government spending has encouraged investment in defense-related companies. Palantir has expanded its partnerships within military and intelligence sectors, solidifying its position in this environment.
Amidst this backdrop, Wall Street has largely dismissed concerns surrounding the recent blacklisting of Anthropic, an artificial intelligence company that began collaborating with Palantir in late 2024 on defense initiatives. Analysts from Rosenblatt maintained a “buy” recommendation for Palantir’s stock, raising their price target from $150 to $200. They noted that the escalating conflict in the Middle East could enhance Palantir’s government pipeline, underscoring that there are sufficient alternatives to Anthropic’s AI offerings, particularly in light of the company’s existing contract with the U.S. Army—a remarkable $10 billion deal secured last year.
Palantir’s products have been pivotal in providing AI capabilities such as weapons targeting through their Maven Smart System, which has already seen deployments in operations pertaining to Iran. However, Palantir has not publicly addressed its future strategies involving Anthropic, which was recently informed that its technology would be excluded from government contracts due to deadlock talks regarding its use in autonomous weapons and domestic surveillance concerns. Anthropic’s CEO, Dario Amodei, stated his intent to legally challenge this designation as a supply chain risk.
Despite the obstacles facing Anthropic, major cloud service providers like Amazon, Microsoft, and Google have confirmed their commitment to offering Anthropic’s products for non-defense purposes. In November 2024, Palantir and Amazon Web Services established a partnership with Anthropic, aimed at integrating its AI models into defense and intelligence workflows. Earlier, Anthropic also secured a $200 million contract with the Department of Defense—the first AI lab to integrate its systems on classified networks.
Piper Sandler analysts referred to Anthropic as a “trailblazer” for AI within the sensitive context of government operations and suggested that the transition to alternate AI solutions could be cumbersome. They, too, have a buy rating on Palantir, with a price target set at $230, acknowledging the complexity and time involved in replacing embedded AI functionalities.
The rally in Palantir’s shares was also supported by an upswing in the software sector, which had faced extensive sell-offs in recent months amid fears that AI could jeopardize traditional software business models. This week, the iShares Expanded Tech-Software Sector ETF rebounded nearly 8%, with companies like CrowdStrike, ServiceNow, and AppLovin witnessing gains exceeding 15%. Analyst Gil Luria from D.A. Davidson remarked on the market dynamics contributing to this stabilization, noting that the accumulation of short positions in the software sector created favorable conditions for a rebound.
