Palantir Technologies Inc. rebounded nearly 6% on Middle East war developments after weeks of decline amid artificial intelligence bubble concerns. Rising tensions between the United States and Iran have fueled expectations of increased defense contracts.
On Friday, Palantir closed at $145.17 on the New York Stock Exchange, up 5.81% from the previous session. The stock continued to edge higher in after-hours trading.
Palantir built its business primarily on U.S. Department of Defense contracts. The AI boom drove civilian contract growth and sent shares soaring, but the stock recently took a direct hit from overvaluation concerns. Shares have plunged 33% from their October peak and remain down 18% year-to-date even after Friday's rally.
However, the outbreak of Middle East conflict has renewed focus on the company's core security business. Some on Wall Street are highlighting Palantir's solid fundamentals.
Rosenblatt Securities called the recent pullback a buying opportunity, maintaining a "buy" rating with a $150 price target. The firm noted Palantir's revenue growth of 56% over the trailing twelve months and gross margin of 82%, indicating a substantive profit structure.
Palantir has maintained strong retail investor support despite valuation concerns. According to market research firm Vanda Track, retail investors purchased $8 billion worth of Palantir shares last year—an increase of more than 80% from 2024, ranking fifth among stocks by retail net purchases. This buying pushed the stock to triple-digit returns for three consecutive years, with a cumulative gain of 3,000% over that period.
Cathie Wood, CEO of ARK Investment Management, also predicted the rally would continue. "AI investment strategy is shifting from hardware to software," she said, adding that Palantir would occupy a dominant position in the software sector.