Palantir Technologies Inc. (NASDAQ:PLTR) has been one of the most resilient players in the AI space, riding the artificial intelligence wave that has redefined both commercial analytics and national defense. However, amid growing scrutiny from Congress and rising concerns over government AI usage, analysts have trimmed Palantir’s price target to $90—down from earlier estimates of $105.
While the cut remains modest, it reflects an increasingly complex regulatory and political environment for the company as it seeks to expand its influence across defense, intelligence, and government contracting.
🧠 AI Ambitions Under Fire
Palantir, long known for its deep ties to U.S. government agencies, is now facing heat from a coalition of nearly 50 House Democrats, who have voiced concern over the unauthorized deployment of AI systems within the federal government.
The pushback comes just weeks after President Donald Trump launched the Department of Government Efficiency (DOGE), tasking billionaire Elon Musk with rooting out “waste, fraud, and abuse” using AI-driven systems. While Palantir has not confirmed its involvement in DOGE, the company’s existing federal contracts and rumored collaboration with Musk’s xAI have put it squarely in the spotlight.
In a letter addressed to the Office of Management and Budget (OMB), lawmakers warned that the use of unvetted AI tools poses significant data security, privacy, and ethical risks.
“These present serious security risks, self-dealing, and potential criminal liability if not handled correctly,” the letter states, particularly referencing tools powered by xAI, Musk’s AI startup.
Lawmakers are pressing the administration to cease usage of any AI systems not cleared through formal approval processes, such as FedRAMP, and to disclose whether any tools used were developed by Musk-affiliated firms—raising concerns about conflicts of interest and transparency.
🛡️ Defense Deals Drive Growth
Despite the political turbulence, Palantir continues to gain ground as a leader in defense-focused AI solutions. The company recently struck a major deal with NATO, reinforcing its position as a key supplier of mission-critical data platforms and AI tools for allied military operations.
This comes on the heels of reports suggesting Palantir is part of a proposed joint venture with SpaceX and Anduril Industries to support the Trump administration’s planned “Golden Dome” missile defense system—a U.S. counterpart to Israel’s Iron Dome.
Such partnerships signal Palantir’s deepening integration with U.S. national defense strategies, a trend that has made the company a favorite among hedge funds despite market-wide tech selloffs.
📉 Why the Price Target Was Trimmed
Analysts remain bullish on Palantir’s core business but have cited the following as reasons for the price target revision:
- Political risk: Increased Congressional scrutiny and potential AI regulation could slow government AI deployment.
- Contract delays: Ongoing reviews may delay key procurement decisions, especially if opposition in Congress gains traction.
- Market volatility: The broader uncertainty in global tech markets and U.S. fiscal policy remains a drag on high-growth AI stocks.
Still, Palantir’s stock rose 1.15% in early Monday trading, buoyed by optimism around its NATO expansion and the growing demand for AI-powered cybersecurity and analytics platforms.
💰 Hedge Funds Still Betting Big
Palantir remains one of the most widely held AI stocks by hedge funds, according to Q4 2024 data. Many institutional investors view Palantir as a defensive growth play—uniquely positioned to benefit from both commercial AI momentum and long-term government contracts.
Palantir was also recently listed among the top 12 AI stocks on Wall Street’s radar, joining the ranks of Microsoft, Nvidia, and Alphabet as core AI infrastructure providers.
