Palantir Technologies' (PLTR) Q3 earnings are likely to be another major step in the "right direction" of the artificial intelligence revolution, Wedbush said in a Sunday research report. The company is due to report Q3 results on Monday, following the close of US markets.

The company could reach a trillion-dollar market capitalization over the next two to three years as management shapes its commercial business to monetize use cases in the AI revolution, analysts wrote.

The Q3 consensus revenue estimate of $1.09 billion is "very beatable" as the company's artificial intelligence platform continues to record "unprecedented" demand from commercial and government sectors, according to the note.

A product portfolio of enhanced AI capabilities is helping Palantir generate further momentum within the federal sector. The ramp in AI investments under the current administration is also expected to benefit Palantir in the government vertical, according to Wedbush.

Palantir's partnerships with Snowflake (SNOW) and Nvidia (NVDA) position the company to drive sustained growth from AI demands as its platform offerings are increasingly integrated across enterprises, Wedbush stated.

The brokerage said it reiterated its outperform rating on the stock and raised its price target to $230 per share from $200.

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