Palantir's stock could surge almost 40% as Iran conflict dispels a big concern, analyst says

By William Gavin

Palantir should be able to prove its growing value to the military and quell fears that it's merely an AI 'wrapper,' according to a Rosenblatt analyst

Palantir Technologies made $1.9 billion from its work with the U.S. government in 2025.

Critics of Palantir Technologies have often dismissed the software maker as just another so-called wrapper of artificial-intelligence models. But conflict with Iran is highlighting the company's value to to the military, according to an analyst who sees almost 40% upside for the stock.

"War regrettably underscores the value of Palantir over just another LLM," or large language model, Rosenblatt analyst John McPeake wrote in a note to investors on Tuesday, adding that the conflict will likely show the "strength and leverage" of Palantir against LLM makers like OpenAI and Anthropic.

McPeake, who began covering Palantir last week with a buy rating, raised his price target to $200 from $150. Palantir's stock (PLTR) rose 1.4% on Tuesday, closing at $147.22.

Before the U.S.-Iran conflict broke out over the weekend, the Defense Department had already said it would award companies "bigger, longer contracts" for weapons systems that have been proven to work. Conflict with Iran could make spending more urgent and less controversial, Stifel analyst Jonathan Siegmann wrote in a note to clients this week.

"We have a virtually unlimited supply of these weapons," President Donald Trump wrote on Truth Social on Monday. "At the highest end, we have a good supply, but are not where we want to be."

That demand could help Palantir. McPeake said the company could benefit from global instability and the need for comprehensive solutions. In July, Palantir won a contract from the U.S. Army, which consolidated 75 contracts into a single 10-year agreement worth up to $10 billion.

In its most recent quarter, Palantir recorded revenue of $570 million from deals with the U.S. government. Overall, it made $1.9 billion from work for the U.S. government in 2025, up from $1.2 billion a year earlier.

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McPeake noted that the conflict with Iran began shortly after contract negotiations between the Pentagon and the AI lab Anthropic blew up. The $380 billion firm has said it was concerned that its Claude could be used for mass surveillance or the development of autonomous weapons.

Trump has given federal agencies six months to stop using Anthropic's models. The Pentagon also designated the firm a supply-chain risk, which prevents military contractors from having a commercial relationship with Anthropic. However, Anthropic argues that the Pentagon lacks legal authority to enforce that restriction beyond work with the Defense Department.

McPeake said the phase-out period should give government agencies plenty of time to transition to using one of Claude's competitors. Claude itself has been used in at least one high-profile mission through a Palantir partnership, but McPeake said he thinks the company will be able to manage a shift.

In his view, the primary use of LLMs during conflict is data analysis, one of the areas where Claude doesn't top the leaderboards. Models from both xAI and OpenAI are supported by Palantir's AI platform and cleared for deployment in classified environments.

See: Facing backlash, OpenAI's Sam Altman says he made a 'sloppy' mistake in Pentagon deal

The U.S. "absolutely needs strong AI models to support their mission especially in the face of growing threats from potential adversaries who are increasingly integrating AI technologies into their systems," OpenAI said in a recent blog post.

-William Gavin

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03-03-26 1643ET