Palantir said it has extended a major U.S. Army artificial intelligence contract worth $619 million. Palantir stock rallied Thursday.
Palantir said the U.S. Army has been using its software for "essential missions" and to "enable faster decision-making across the force" since 2018. The total value of the contract extension is projected to be $401 million over four years, "with a total available ceiling of $619 million," the company announced Wednesday.
Palantir stock gained 3.8% to close at 74.21. The rally follows Wednesday's roller coaster ride when Palantir stock advanced early in the session only to tumble, closing with a 4% loss in a broad market sell-off.
William Blair analyst Louie DiPalma had told clients in a Wednesday note that Palantir was about to announce the contract extension. DiPalma reiterated an underperform rating on Palantir stock citing "risks to the upside include momentum, optimism associated with the new Trump administration, and the impact of artificial intelligence on Palantir's business."
Last week, Baird analyst William Power also warned against chasing Palantir stock gains, noting the shares have outpaced the S&P 500 big time, "suggesting high expectations, though we also acknowledge the strong, accelerating operating momentum."
Palantir stock was still trading well above its 21-day and 50-day averages, according to IBD MarketSurge. The stock held on to a perfect Relative Strength Rating of 99.
Palantir is set to be added to the Nasdaq 100 before the market opens Dec. 23.
