Palantir (NASDAQ:PLTR) stock rose 6% on Oct. 9 and another 2% overnight after announcing it won a $250 million, three-year contract covering artificial intelligence (AI) and machine learning (ML) for the U.S. Army and its special forces.
Palantir has been working with the Army to integrate data and train AI models since 2018.
PLTR stock opened this morning at $18.08 per share, a market capitalization of over $38 billion. The high for the year is $19.84.
War Winners
Palantir has focused on government contracts, especially military contracts since it was founded in 2003. The company showed its first profit this year.
However, shares in the data analysis and visualization service spiked in 2023 after ChatGPT launched the generative AI boom. Palantir is up 174% in 2023, and the market cap is now over 18 times sales.
While many investors came to Palantir for AI this year, they may be staying for its military contracts. This follows Hamas’ attack on Israel over the weekend and the war Israel launched in response. While Israel’s reliance on technology was criticized after the attack, that’s unlikely to change. Neither will that of the U.S. military.
Palantir’s status as a military contractor is thus benefiting from events. Other defense stocks, like Lockheed Martin (NYSE:LMT), Northrup Grumman (NYSE:NOC), and General Dynamics (NYSE:GD), also rose sharply on Oct. 9. Before the conflict, fellow InvestorPlace contributor Joel Baglole called some defense stocks undervalued.
Palantir was working hard to diversify its income streams before the conflict. It recently signed a deal with PwC and is closing in on a $580 million deal with England’s National Health Service. But Morgan Stanley called the stock overvalued.
PLTR Stock: What Happens Next?
Expect more speculative gains from Palantir as both the Israel-Hamas and Ukraine-Russia wars drag on. Buying growth is perilous, but doing so at the start of a war is less perilous.
As of this writing, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
