New Palantir Price Target as AI Firm Becomes America's 'Most Important Defense' Name

It appears, for now, despite a little post-cease-fire shenanigans that actually killed a few people, that perhaps the hostilities between Israel and Iran have come to an end. Or at least this chapter has. 

As I write this piece late on Tuesday morning, the Dow Jones U.S. Defense Index is down 1.5% led lower by Kratos KTOS, Northrop Grumman NOC, L3Harris LHX, Lockheed Martin LMT and AeroVironment AVAV. Hmm. I guess that means that the suddenly increased need for new bomber, fighter and unmanned aircraft, as well as aircraft components, radars and increased missile and missile defense capabilities has suddenly dissipated. 

RTX RTX is trading lower as well. For some absurd reason, it is not in that index.

There's one higher-profile defense contractor that's trading higher on Tuesday morning. They don't sell hardware. They don't sell things that go "boom." They don't sell flying machines, machines that swim or tracked vehicles. They sell intelligence. They sell gig-data driven, AI-supported, game-changing analysis. I speak, of course, of Palantir Technologies PLTR. 

In this environment, it has become possibly America's most important defense contractor. Is anyone else close? I keep expecting someone, maybe a firm like Snowflake SNOW to compete, but so far, the gap between first and second place is wider than the Grand Canyon.

There's More...

Of course, the NATO Summit 2025 kicks off on Tuesday in The Hague. NATO members are expected to approve an increase in defense spending for member nations to 5% of GDP. Only Spain opted out. It was a little less than eight years ago that President Trump could not get the majority of these nations to pay their fair share, which was then mandated at just 2%. 

Canada, counting on its proximity to the U.S. for protection, still is nowhere near the old 2% requirement. Interesting how an aggressive Russian federation on one's doorstep can so quickly change the perception of these countries to be a fully participating member of a large military alliance that includes a superpower.

Those nation's closer to Russia have enthusiastically embraced the new 5% target and several have already surpassed it. Our northern neighbors, too far away to actually feel the heat from the war in eastern Europe, obviously have not prioritized defense spending.

Whatever actually comes out of this summit, on top of the increase in spending on defense, I am sure there will be some increased orders for the industrial hardware of conventional warfare. There will still be costly purchases of tanks, artillery, aircraft, naval craft, missiles and missile defense technology. However, this plays straight into the hands of a firm like Palantir. For nations strapped fiscally, looking for the most bang for their buck, or euro, the purchase of software -riven big data platforms capable of providing accurate analysis and actionable intelligence may just be the best way to up-spend on defense.

Don't Forget...

Intelligence is a corporate affair too. The commercial side of what Palantir provides has been growing more quickly than the government side, by a 71% to 45% score. Valuation is absurd. On that, we sort of agree. Unless an actual tsunami of investment growth continues to be made in this kind of analysis and resultant intelligence is made by governments and businesses that consider it a non-negotiable "must-have." Then, at what price, survival? The threat — and it will come — to Palantir's valuation will come from competitive pressure, but that day, in my opinion, is not yet upon us.

The Charts​

I gave readers this chart a couple of weeks ago. Not that much has changed. The stock continues to break out from the bullish cup-with-handle pattern that we had profiled this past spring. Relative strength has remained strong without becoming technically overbought. The daily MACD is still postured bullishly as well, with a histogram of the nine-day EMA that is still above zero, even if only by smidge, and a 12-day EMA that still rides above a 26-day EMA with both in positive territory, though the margin between the two is narrow.

Overlaying a Raff regression model on that same chart that goes back to last summer, we can see that, with only two exceptions, when breakouts to both the upside and downside failed, this stock has remained on trend and that trend is higher. Currently, the stock is still riding its 21-day EMA and resides in the upper chamber of the model. The current pivot is the upper trendline of the model (about $151). This allows me to increase my target price at this time, despite the fact that my prior target has not yet been breached.

Palantir Technologies (PLTR)

Target Price: $181 (up from $156) (re-establishes my target as the high on Wall Street)

Pivot: $151 (upper trendline of regression model)

Add: Down to 50-day SMA (currently $121)

Panic: Loss of 200-day SMA (currently $82)

At the time of publication, Guilfoyle was long PLTR, NOC, RTX and LHX equity.