Palantir has struck its biggest deal yet with the Pentagon. Wedbush sees this as a new driver

Palantir's $10 billion agreement with the U.S. Army for a ten-year supply of AI software and tools was the largest in the company's history. Wedbush analysts believe that this order will be another driver for it and reiterate a recommendation to buy its shares - amid the cautious attitude of most of Wall Street.

Palantir, a company that develops AI for military and civilian use has received a major contract from the U.S. Army worth up to $10 billion over ten years. It is one of the largest contracts in Pentagon history and the largest in Palantir's history, noted The Washington Post.  

The agreement aims to meet the Army's software and data operations needs, and will allow the government to provide procurement flexibility and eliminate additional fees, the press release stated. The company will consolidate 75 Pentagon contracts into one enterprise contract. It's part of the White House's effort to improve spending efficiency through AI, as CNBC reminds. Palantir had previously delivered two AI-powered systems under a $178 million contract;

"The simplified approach reduces procurement timelines and provides the military with rapid access to advanced tools for data integration, analytics and AI," said the Pentagon in a statement.

Palantir shares fell 0.9% in trading on Aug. 1 amid a general market crash following Donald Trump's new trade duties.

Since the beginning of the year, the company's value has increased by 108%, and in 2024 has increased by more than 300%, allowing this stock to become the best performing stock in the S&P 500 index. Palantir now ranks 20th in the world by market capitalization and is one of the top 10 tech players, while barely matching its status as a large-cap company during the bear market in 2022, reminds The Motley Fool.

Palantir's new deal with the U.S. Army will be "an additional driver for the company," Wedbush analysts said, their quoted Seekingalpha. 

"We believe this deal creates additional momentum for Palantir as AI initiatives in the U.S. government accelerate, AI becomes a strategic priority at the federal level, and Palantir is ideally positioned to benefit from a strong wave of federal spending on it," wrote the Wedbush team led by Dan Ives. He notes that the government's drive to increase efficiency through software and staff reductions is paving the way for Palantir to win new contracts.

"Palantir remains one of our key technology investment ideas for 2025, and this transaction gives the company the opportunity to make unprecedented progress across its portfolio in both federal and commercial markets," Ives said.

Ives expects strong results from the AI company when it reports on Monday, August 4th after the close of trading. Investment Bank reiterated a buy recommendation on Palanrtir's stock (Outperform rating), with its $160 target price roughly in line with its last closing quote on July 31.

Most analysts who follow the company are more reserved. According to data from MarketWatch, the most popular recommendation is to hold the stock: about 60% of analysts gave it. About one in four recommend buying the stock (Buy and Overweight ratings), while the rest recommend selling it (Sell). At the same time, the average target is 36% lower than the last closing price.

This article was AI-translated and verified by a human editor