Palantir Technologies shares PLTR rose 2% in premarket trading on Thursday after Goldman Sachs upgraded the defense and enterprise AI software company to ‘Buy’ from ‘Neutral’, citing the potential for further growth in its addressable market.
Goldman analyst Gabriela Borges set a $230 price target for Palantir, implying an 18% upside from Wednesday’s close.
The target also represents a potential gain from the stock’s record high of more than $207 reached in October last year.
The upgrade comes as Palantir shares have underperformed some of their growth-focused peers this year, said the analyst, leaving the stock trading at a relative discount despite continued demand for its AI software.
Goldman sees another phase of Palantir outperformance
Borges said Palantir could be entering another period of outperformance into 2027, based on the firm’s recent industry discussions.
Goldman said Palantir’s total addressable market could see another significant expansion as demand increases for sovereign AI, bespoke applications and the company’s newer verticalization strategy.
Sovereign AI refers to efforts by governments and organisations to develop or control AI infrastructure within their own jurisdictions.
Bespoke applications are software solutions designed for specific customers or industries, while verticalisation involves adapting products and services to particular sectors.
Borges said the market is debating whether much of Palantir’s AI opportunity has already been reflected in its valuation or whether the company has room for further upward revisions.
Goldman also highlighted Palantir’s forward-deployed engineering, or FDE, model, which involves close feedback between its field operations and product development.
Borges said the company has refined the model to the point where some elements can be automated through AI.
Palantir’s AI opportunity remains a key focus
The Goldman upgrade comes as investors continue to assess the potential scale of corporate and government spending on artificial intelligence.
The firm’s industry conversations indicate that sovereign AI, bespoke applications and verticalised products could broaden the markets available to Palantir beyond its existing opportunities.
Palantir has also attracted attention from technology analysts as AI adoption expands across industries.
Tech industry analyst Dan Ives on Wednesday said the broader AI investment cycle remains in its early stages and argued that investors may be underestimating the scale of future spending.
Ives has initiated coverage across nearly 50 technology companies and expects a potential $4 trillion AI spending cycle to develop.
He said secondary and tertiary opportunities linked to AI adoption are still emerging across the corporate sector.
Analysts see further upside for Palantir stock
Ives highlighted Palantir within the cybersecurity and AI-related technology space and assigned the stock a $250 price target, representing about 30% upside.
The differing targets from Goldman and Ives point to continued optimism among some analysts about Palantir’s growth prospects, although their views are based on separate assessments of the company and the broader AI market.
Goldman’s upgrade places greater emphasis on Palantir’s potential market expansion through sovereign AI, bespoke applications and verticalisation, while Ives’ outlook is tied more broadly to the expected scale of AI spending.
Palantir shares were on track for a more than 10-month high in Thursday’s premarket trading and remained within $8 of their record peak.
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