Palantir Is Reportedly Building a US ‘Spy Machine.' How Should You Play PLTR Stock Here?
Palantir (PLTR) is in focus this morning following a report that it has received a contract from the President Donald Trump administration to build what is being described in the media as a 'spy machine.'
According to The New York Times, the Nasdaq-listed company is creating a database of Americans based on personal data pulled from various federal agencies, raising ethical and privacy concerns.
At the time of writing, Palantir shares are up more than 100% versus their year-to-date low in April.
Palantir Stock Could Benefit From 'Spy Machine' Contract
Critics are citing potential for abuse among other risks tied to the surveillance infrastructure that Palantir Technologies is reportedly developing for the U.S. government as well.
However, the presumably large, long-term, and high-value contract may prove a major tailwind for Palantir stock as it will likely boost the company's already fast-growing government business.
In Q1, the big data analytics firm saw its US government revenue increase by another 45% on a year-over-year basis to $373 million.
In short, building the said 'spy machine' for the Trump administration suggests PLTR is deeply embedded in critical government operations, which could lead to steady revenues and improved investor confidence.
William Blair Reiterates Dovish View on PLTR Shares
William Blair analyst Louie DiPalma remains bearish on PLTR shares even though the big data analytics firm is evidently growing its ties with the U.S. government this year.
On its Q1 earnings call, Palantir said its ongoing investments in technical talent and AI production use cases will result in higher expenses in 2025, which DiPalma dubbed a big red flag for investors.
Why? Because the AI stock is already trading at a massive premium even to the likes of Nvidia (NVDA).
Palantir Could Tank More Than 25% From Here
Other Wall Street analysts seem to agree with DiPalma's dovish view on Palantir stock, given the consensus rating on the Denver-headquartered firm currently sits at 'Hold' only.
Analysts' mean target of about $94 on PLTR shares indicated potential downside of well over 25% from current levels.
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