Palantir was an outlier in a tough week for the stock market, as the provider of software and services to the U.S. government saw its stock rally 15% following the U.S. attack on Iran.
The tech-heavy Nasdaq fell 1.2% for the week, pushed lower by names like Apple, Google and Micron, and other benchmarks tumbled as oil prices spiked and a report showed the U.S. economy unexpectedly lost jobs in February.
But with President Donald Trump showing no signs that the war in Iran is coming to a speedy conclusion, investors piled into Palantir, which counts on government spending for about 60% of its revenue and has been ramping up its work with military and intelligence agencies. Meanwhile, Wall Street appears unconcerned about the government’s blacklisting of artificial intelligence company Anthropic, which started partnering with Palantir on defense work in late 2024.
Analysts at Rosenblatt kept their buy recommendation on the stock and upped their price target to $200 from $150. The stock closed on Friday at $157.16
The analysts wrote that the “conflict in the Middle East bodes well” for Palantir’s government pipeline, and that there are “adequate alternatives” to Anthropic’s Claude models. They added that more deals like the company’s contract with the Army could be on the way.
Last year, Palantir inked a $10 billion pact with the Army. The company also supplies AI capabilities like weapons targeting to the military through its Maven Smart System program, and its tools were used in Iran.
As for its work with Anthropic, Palantir hasn’t said anything publicly about its plans. The Defense Department announced a week ago that Anthropic’s technology would be excluded from government contracts after the two sides failed to come an agreement on how the AI models could be used with respect to autonomous weapons and domestic surveillance.
On Thursday, Anthropic acknowledged that it had officially been notified of its designation as a supply chain risk, and CEO Dario Amodei said in a blog post that he has “no choice” but to challenge the decision in court.
Amazon, Microsoft and Google, the three leaders in cloud infrastructure, have all subsequently said they will continue to offer Anthropic’s products to customers on their clouds for non-defense projects.
Palantir and Amazon Web Services partnered with Anthropic in November 2024 to bring Claude models onto AWS and make them available to defense and intelligence agencies. In July, Anthropic was awarded a $200 million contract with the Department of Defense, and was the first AI lab to integrate its models on classified networks.
Analysts at Piper Sandler wrote in a note on Tuesday that Anthropic is a “trailblazer” for AI in a data-sensitive environment like the government, and suggested that replacing it will be a headache. Still, they have a buy rating and $230 price target on Palantir.
“While PLTR is model agnostic, onboarding and re-establishing embedded AI functions will take time,” the analysts wrote. “Time might have been spent on growth accretive opportunities.”
Another factor at play in Palantir’s rally this week was a rebound in software stocks. The sector has been beaten down in recent months on fears that AI will displace software and disrupt longstanding business models. New AI tools, including a security offering from Anthropic, further fueled concerns, contributing to a sell-off in cybersecurity.
This week, the iShares Expanded Tech-Software Sector ETF surged nearly 8%. CrowdStrike, ServiceNow and AppLovin each jumped more than 15% each.
“We just got to a point where everybody was short software,” said Gil Luria, an analyst at D.A. Davidson, in an interview. “Once you get to that point, it starts stabilizing, and we get closer to the bottom. This is all just market dynamics.”
WATCH: Anthropic to challenge supply chain risk designation in court