Goldman Sachs upgraded Palantir shares from neutral to buy on Thursday.

The investment bank raised its price target on the stock to $230, implying roughly 18.5% further upside. The shares closed at $194.12 on Wednesday.

Goldman Sachs believes the company will secure more government contracts, automate more positions, and build out a more vertically integrated supply chain.

Goldman Sachs analyst Gabriela Borges wrote in a research note on Thursday: "Driven by the sovereign AI transformation, customized applications, and Palantir's latest verticalization strategy, the (total addressable market) could see another leapfrog expansion."

She added: "The forward deployed engineer (FDE) model is not simply about hiring forward deployed engineers; the model requires a tight feedback loop between front-line business teams and the product side, and Palantir has refined this mechanism to maturity, to the point where it can even use AI to automate work related to forward deployed engineers."