Palantir Shares Rise 15% in a Week as Iran Conflict Boosts Defense Spending Outlook

Palantir Technologies emerged as a rare market outperformer during a challenging week for equities, with the company’s shares climbing about 15% as investors anticipated increased government demand linked to the escalating conflict involving Iran.

The broader technology sector faced pressure during the week. The Nasdaq Composite declined around 1.2%, weighed down by major technology stocks including Apple, Google and Micron. Markets also reacted to rising oil prices and economic data indicating the U.S. economy unexpectedly lost jobs in February.

Despite the wider market weakness, Palantir’s close ties to government contracts positioned the company as a potential beneficiary of increased defense spending. Roughly 60% of Palantir’s revenue comes from government clients, and the firm has expanded its work with military and intelligence agencies in recent years.

Analysts See Defense Demand Supporting Growth

Analysts at Rosenblatt maintained a buy rating on Palantir and raised their price target to $200 from $150. The company’s shares ended Friday trading at $157.16.

The analysts said the conflict in the Middle East could strengthen Palantir’s government contract pipeline, suggesting that additional defense-related deals could follow the company’s existing partnerships with U.S. military agencies.

Palantir previously secured a $10 billion agreement with the U.S. Army, and its technology is used in the Maven Smart System, a program that provides artificial intelligence capabilities such as weapons targeting for military operations. Company tools were reportedly used in operations involving Iran.

Anthropic Issue Raises Questions but Concerns Limited

The rally also came despite developments involving Anthropic, an artificial intelligence company that partnered with Palantir on defense-related projects beginning in late 2024.

The U.S. Department of Defense recently designated Anthropic as a supply chain risk, excluding the company’s technology from government contracts after disagreements over how its AI models could be used in areas such as autonomous weapons and domestic surveillance.

Anthropic confirmed it had received official notification of the decision, and CEO Dario Amodei said the company intends to challenge the designation in court.

However, Wall Street analysts appear relatively unconcerned about the potential impact on Palantir. Rosenblatt noted that alternative AI models could be used if necessary.

Meanwhile, Amazon, Microsoft and Google confirmed they will continue offering Anthropic’s AI products through their cloud platforms for non-defense applications.

Existing Partnerships and AI Contracts

Palantir and Amazon Web Services (AWS) partnered with Anthropic in November 2024 to make the company’s Claude AI models available to defense and intelligence agencies through AWS infrastructure.

Anthropic had previously secured a $200 million contract with the U.S. Department of Defense in July, becoming the first AI research firm to deploy models on classified networks.

Analysts at Piper Sandler described Anthropic as a “trailblazer” in applying artificial intelligence within government environments that require strict data security. They warned that replacing its technology could create operational challenges but maintained a buy rating on Palantir with a $230 price target.

Software Sector Rebound Supports Rally

Another factor supporting Palantir’s share gains was a broader rebound in software stocks. The sector had previously come under pressure amid concerns that emerging AI tools could disrupt traditional software business models.

This week, the iShares Expanded Tech-Software Sector ETF rose nearly 8%, while companies such as CrowdStrike, ServiceNow and AppLovin each recorded gains exceeding 15%.

Gil Luria, an analyst at D.A. Davidson, said market positioning also contributed to the rebound.

“We just got to a point where everybody was short software,” Luria said. “Once you get to that point, it starts stabilizing, and we get closer to the bottom.”

As geopolitical tensions and defense spending remain key factors shaping technology markets, investors are closely watching companies like Palantir that operate at the intersection of AI, data analytics and national security.