Geopolitical conflicts often cause rallying across the aerospace and defense industries, but rarely do they cause software stocks to trade against the trend. Yet that’s undoubtedly what happened to Palantir (PLTR) stock, which has gained 15% over the past week. What makes it so interesting is that it comes at a time when software stocks are suffering due to AI advances.
While President Trump has dubiously claimed that the Iran war has already reached a conclusion, stakeholders know that things are not so straightforward. Iran’s decision to take advantage of the Strait of Hormuz traffic by targeting US military installations in neighboring countries makes one thing clear: the region’s political heat will not subside anytime soon, even if US military strikes are halted.
This is precisely where Palantir becomes relevant. Palantir’s unique niche in its “ontology” (which it describes as a “tool factory” for AI and human agents) and its role in combat planning and target recognition means it could win more government contracts even if the military’s role in nature becomes passive in the coming weeks.
Palantir is a data analytics and AI company that serves commercial and government customers through a variety of platforms. The company is led by Alex Karp and is headquartered in Miami, Florida.
PLTR stock has more than doubled over the past 12 months, despite being down nearly 16% year-to-date (YTD). The S&P 500 ($SPX) is basically flat so far this year. For a stock that has outperformed the benchmark index over the past few years, this year has certainly looked like an outlier so far.
The stock currently trades at a non-GAAP forward P/E ratio of 118.35x. Consensus revenue growth of 75% in 2026, 40% in 2027, 43% in 2028, and 63% in 2029 justifies this premium. Palantir also has significant debt of $412 million, which is significant compared to more than $7 billion in cash. Gross margins of 82% are very healthy, and although net margins are significantly lower at 36%, they will continue to grow as the company scales its operations. The company has free cash flow of $2.1 billion.
The company’s stock rose on February 2 after reporting Q4 earnings. It reported EPS of $0.25, compared to expectations of $0.23, and revenue of $1.41 billion, compared to the $1.33 billion expected by Wall Street.
