Palantir Technologies (PLTR) shares advanced 2% in premarket trading on Thursday after Goldman Sachs raised its rating on the defense and enterprise AI software company to 'Buy' from 'Neutral'. The upgrade reflects expectations for further expansion of Palantir's addressable market, driven by demand for sovereign AI, bespoke applications, and a new verticalization strategy.
Goldman analyst Gabriela Borges set a price target of $230, implying an 18% upside from Wednesday's close. That target also suggests potential gains from the stock's record high of over $207 reached in October last year. The upgrade comes as Palantir shares have underperformed some growth-focused peers this year, leaving the stock trading at a relative discount despite sustained demand for its AI software.
Goldman Sees Another Phase of Outperformance
Borges indicated that Palantir could be entering another period of outperformance extending into 2027, based on recent industry discussions. Goldman noted that Palantir's total addressable market could see significant expansion as demand increases for sovereign AI, bespoke applications, and the company's newer verticalization strategy. Sovereign AI refers to government and organizational efforts to develop or control AI infrastructure within their own jurisdictions, while bespoke applications are tailored software solutions for specific customers or industries. Verticalization involves adapting products and services to particular sectors.
The market is currently debating whether much of Palantir's AI opportunity has already been priced into its valuation or whether the company has room for further upward revisions, Borges said. Goldman also highlighted Palantir's forward-deployed engineering (FDE) model, which involves close feedback between field operations and product development. Borges said the company has refined this model to the point where some elements can be automated through AI.
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. Goldman's industry conversations indicate that sovereign AI, bespoke applications, and verticalized 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
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 verticalization, 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. The stock's recent momentum has been supported by strong demand for its AI platforms, though some investors remain cautious about valuation levels.
This article is for informational purposes only and does not constitute financial advice.
