Palantir Technologies (PLTR) stock has surged this past month, climbing almost 17%, surpassing both the overall market and several of its AI peers. The rally has been fueled by heightened defense demand due to the escalating U.S.–Iran conflict. Investors are now drawn towards defense contractors and mission-critical software providers.
While the headlines might be driving the current surge, Palantir’s rally in 2026 is rooted in its fundamentals, which are strengthening.
When geopolitical conflicts arise, markets tend to favor companies directly exposed to defense, intelligence, and operational decision-making.
Valued at $365 billion by market capitalization, Palantir is a software company that builds AI-powered data analytics platforms used by governments and businesses to make better, faster decisions. Its main platforms — Gotham (for government), Foundry (for commercial), and Artificial Intelligence Platform (AIP) — turn complex data into real-time, actionable insights. The rising conflict between the U.S., Israel, and Iran has increased the demand for AI-powered combat analytics and speedier procurement cycles. Palantir already has significant relationships with the U.S. government. In fact, the company’s government segment generates much of its revenue.
In the fourth quarter of 2025, U.S. government revenue climbed 66% year-over-year (YOY) to $570 million, while full-year U.S. government revenue climbed 55% YOY to $1.85 billion. Meanwhile, total revenue for 2025 surged 56% to $4.4 billion. Management anticipates a 61% increase in revenue in 2026, with a target of $7.19 billion.
One of the most significant developments that has put Palantir in the spotlight is its partnership with GE Aerospace (GE) to support J85 engines powering U.S. Air Force T-38 training jets. The contract, awarded by the Defense Logistics Agency, aims to improve supply-chain logistics, predict part failures, and accelerate decision-making across maintenance operations. Management emphasized that in testing across 6,000 parts, the system improved visibility and reduced delays.
