Wall Street analyst updates Palantir stock price amid defence budget cut fears

Core Viewpoint - Palantir (NASDAQ: PLTR) is gaining investor confidence following positive endorsements from Wall Street, particularly regarding its role as a key contractor for the Department of Defense [1][3]. Financial Performance - For the three months ended May 31, 2024, Palantir reported net sales of $5.03 billion, up from $3.60 billion in the same period of 2023, representing an increase of approximately 39.6% [2]. - The cost of goods sold was $2.58 billion, compared to $1.83 billion in 2023, leading to a gross profit of $2.45 billion, up from $1.78 billion [2]. - Operating income was $238.30 million, a significant improvement from a loss of $91.62 million in the previous year [2]. - Net income for the period was $330.84 million, compared to $53.41 million in 2023, indicating a substantial year-over-year increase [2]. Analyst Ratings and Market Sentiment - Wedbush Securities has reiterated its 'Outperform' rating for Palantir, maintaining a price target of $120, citing the company's leadership in AI and strong traction in both federal and commercial sectors [3][5]. - Analyst Dan Ives views the recent sell-off as a buying opportunity, emphasizing Palantir's potential to reach a trillion-dollar market cap as AI adoption accelerates [4][5]. - Concerns over high valuation persist, with Jefferies' Brent Thill setting a target of $60, indicating a more cautious outlook compared to Wedbush [8][9]. Strategic Positioning - Palantir is positioned to benefit from the U.S. Department of Defense's focus on efficiency and AI-driven technologies, with high-priority contracts expected to remain unaffected by potential budget cuts [6][7]. - The company's involvement in critical military projects is anticipated to support ongoing contract growth, particularly under the Trump administration's increased AI investments [6][8].