Goldman Sachs upgraded Palantir Technologies Inc. (NASDAQ:PLTR) to Buy from Neutral on Thursday, arguing that demand for sovereign AI and custom-built applications could widen the software company's addressable market again.
Analyst Gabriela Borges reiterated a 12-month price target of $230. Based on Wednesday's close of $194.12, the target implies about 18.5% upside, according to Benzinga Pro data.
Sovereign AI Drives the Call
"The [total addressable market] may be setting up for another step function change in depth, because of the shift to sovereign AI, bespoke applications, and Palantir ... has sustained itself even with competitor investments," Borges wrote in a client note, CNBC reported.
Sovereign AI has become central to Palantir's own pitch. The company credited its strong second quarter to customers who want AI built into their systems while keeping their data away from frontier labs.
Those labs include OpenAI, Alphabet Inc.'s (NASDAQ:GOOGL) Google, Anthropic and Meta Platforms Inc. (NASDAQ:META), CNBC reported.
"Our customers have declined to become vassal states of the language labs," CEO Alex Karp wrote to shareholders last quarter.
Forward Deployed Engineers
Borges also pointed to Palantir's forward deployed engineering model, which places engineers directly with customers. The approach "requires tight feedback loops between field and product, which Palantir has perfected to the point of being able to automate via AI [engineers]," she wrote.
In her view, enterprise AI adoption is still early. "We believe enterprises are in the early stages of applying AI to their proprietary data to amplify their existing moats," Borges wrote.
Some software companies are already doing this work in-house. Borges cited CrowdStrike Holdings Inc. (NASDAQ:CRWD) and its SafeMind cyber frontier model. She also cited Datadog Inc. (NASDAQ:DDOG), which applied Adaptive ML researchers to its time series forecasting data. Software firms can usually staff these projects themselves. Many other industries can't.
"We expect industries with lower tech talent density to be an opportunity for Palantir," Borges wrote.
Growth Backs the Thesis
Second-quarter revenue rose 93% from a year earlier to $1.94 billion, beating estimates of $1.8 billion. U.S. commercial revenue jumped 149% to $764 million, and U.S. government revenue grew 90% to $809 million.
Palantir raised its full-year revenue guidance to between $8.15 billion and $8.16 billion, up from $7.65 billion to $7.66 billion. Karp said the strong growth "looks like this is going to go on for at least another 18 months."
Wall Street Already Leans Bullish
Goldman now joins most of the Street in the bullish camp. Benzinga Pro data shows 16 of the 21 analysts tracked rate Palantir a Buy, four rate it a Hold and one rates it a Sell, for a consensus Buy rating.
The average price target is $199, just 0.3% above the current share price. Goldman's $230 target is about 15.6% higher than that average.
PLTR Stock Price Action: Palantir shares have gained nearly 47% over the past three months. The rally came after a rough first half. Heading into August earnings, the stock was down 29% for 2026, then jumped 29.5% in one day on Aug. 4.
On Thursday, Palantir stock up 2.33% at $198.65 in premarket trading, according to Benzinga Pro quote data.