Palantir has executed strongly on AI solutions for both government and commercial clients.
Palantir Technologies Inc.'s stock is up an impressive 110% this year so far. The reason for that success is simple but hard to replicate: artificial-intelligence offerings that are successfully adding value for customers.
"Almost three years after the breakthrough of LLMs" - or large language models - "many enterprises continue to struggle to realize a meaningful value-add from the AI revolution. Palantir customers continue to be an exception," Bank of America analyst Mariana Perez Mora wrote in a note on Monday.
Investors looking for proof of AI monetization haven't found much conclusive evidence elsewhere. Last month, MIT's NANDA initiative released a new report that found 95% of generative-AI pilots have failed to deliver material returns. Adoption for tools such as machine learning and virtual agents has been trending downward for large companies in recent weeks, according to Torsten Sløk, Apollo Global Management's chief economist.
Palantir (PLTR) has been a bright spot in a challenged software environment, as IT budgets have shrunk and concerns about "AI eating software" run rampant. Mora points out that Palantir's value-based business approach - which prices solutions based on the added value of each individual contract, instead of charging customers for each software seat - is "less macro-sensitive and continue[s] to provide business opportunities in challenging times."
Bank of America believes Palantir's competitive advantage with AI solutions will continue to drive its stock outperformance. Mora has a buy rating on the shares, with a price target of $180.
Palantir's history of government partnerships has made it the "incumbent" option for future contracts, according to Mora. Palantir's Foundry technology currently supports the U.S. State Department's AI chatbot, StateChat.
The company recently won a contract from the State Department to support its Orion program. According to the State Department, out of the 42 respondents to the program request, only Palantir's offerings fulfilled the requirements for an AI and machine-learning solution. The agency highlighted Foundry's low-code features, which make it easy to integrate across a wide user base, and its compatibility with other agencies' models.
This development puts Palantir in a favorable position to secure more government contracts going forward, Mora emphasized.
Palantir also showcased several commerical use cases of its Artificial Intelligence Platform $(AIP)$ at the company's AIPCon event last week.
American Airline Group Inc. $(AAL)$ reported using Palantir's Foundry solution to plan route optimizations, saving tens of millions of dollars in realized efficiencies. Palantir's technology helped consolidate and structure pharmaceutical company Novartis AG's $(NVS)$ vast amounts of clinical and research data, aiding scientists in modeling dosages for human deployment and accelerating the drug-discovery process. And energy giant BP PLC $(BP)$ has used Palantir's AIP to collect data from its oil platforms to provide insights to engineers, helping them optimize production.
Beyond those examples, the number of companies mentioning Palantir on earnings calls grew more than four times in the second quarter of 2025, "a sign of strengthening recognition of [Palantir's] solutions as top-notch AI business implementation," according to Mora.
The company's meteoric stock-price appreciation has its fair share of skeptics - such as short seller and Citron Research founder Andrew Left, who called a price of $40 per share "generous" in August. The stock currently trades near $156.
However, while Jefferies analyst Brent Thill wrote last week that it's "challenging to underwrite a durable growth trajectory" that could justify Palantir trading at 70x sales estimates for the next 12 months, he did acknowledge that Palantir showed compelling use cases at the AIPCon event.