Analysts at Wedbush have welcomed the announcement from Palantir Technologies Inc (NYSE:PLTR) and Microsoft Corp (NASDAQ:MSFT) that the two firms will be partnering to develop an integrated tech suite of secure cloud, AI and analytics capabilities for the US Defense and Intelligence Community.
The collaboration will leverage Palantir’s Artificial Intelligence Platform (AIP) in Microsoft government and classified clouds.
Further, Palantir will launch its entire product portfolio onto Microsoft’s cloud products for government agencies to build AI tools for action plans and logistics with boot camp experiences to trial the technology.
Wedbush analysts described the collaboration as “potentially game-changing” for Palantir.
“With this marquee deal solidified and Microsoft leveraging Palantir for AI and large language model (LLM) capabilities to the US government, the company can now increase the pace of AI implementation while Palantir continues to accelerate AIP adoption within the federal sector,” they wrote in a note to clients.
“We believe this will be a launching pad for the Palantir AIP story to hit the DOD and broader Beltway ecosystem over the next 12 to 18 months.”
They noted that Palantir has seen its federal revenues accelerate with government agencies continuing to spend on building AI-driven operational workloads across Defense and Intelligence verticals.
“The company’s federal cloud service is authorized to deploy on Microsoft Azure for impact level 5 environments while deploying its suite of products in Azure Government and Azure Government Secret (Impact Level 6) to continue supporting defense and intelligence communities by operationalizing AI,” they wrote.
“While the availability of these services is subject to agency authorization and accreditation, this is a major step towards generating more durable revenue streams across the US government with Palantir’s use case-building capabilities and its government software offerings seeing accelerating demand across the federal landscape.”
The analysts repeated their ‘Outperform’ rating and $38 price target for Palantir. Shares traded hands on Friday afternoon at $30.