Palantir's stock has risen a lot, but it's still a buy, this analyst argues

Investment Recommendation - Piper Sandler initiates coverage on Palantir with an overweight rating, viewing it as a high-risk but potentially high-reward AI secular winner [1] - The firm acknowledges Palantir's rich valuation but believes the long-term potential justifies the risk, suggesting patience and opportunistic buying [10][12] Company Overview & Strategy - Palantir has created a platform to help people build new AI applications, differentiating it from competitors and positioning it as a key app platform [4][7] - Palantir is shifting from competing with companies like Databricks and Accenture to partnering with them, indicating a significant change in its market position [6] - Palantir addresses two trillion-dollar distinct markets: defense and enterprise, with a common platform and shared R&D [8] Market Trends & Opportunities - The defense industry is undergoing a secular shift from spending on big machines to small drones and AI software, representing a trillion-dollar shift in defense spending [15][16] - Palantir's government business is projected to grow from $2 billion today to $10 billion by 2030 [16] - The enterprise software market is seeing a pendulum swing back towards custom-built software, with custom software currently representing 20-24% of the trillion-dollar market [17][18] Competitive Landscape - In the defense sector, Palantir is leading the charge in the shift towards AI software and away from traditional hardware [16] - In the enterprise sector, Palantir competes with prepackaged software solutions, offering an alternative for large companies to build their own applications using AI tools [18] Management & Culture - Palantir's leadership and culture are described as unconventional, stemming from its origins as a defense tech startup [20][21] - The company's success in suing the US Army to change procurement processes highlights its commitment to ensuring the best technology is selected [21][22]