This stock will benefit as companies and governments implement secure AI, Bank of America says

Published Tue, Aug 29 202311:07 AM EDTUpdated Tue, Aug 29 202312:29 PM EDT

Bank of America expects this software stock to benefit from heightened demand for secure solutions as artificial intelligence disrupts the world. Analyst Mariana Perez Mora reiterated her buy rating on Palantir Technologies and $18 price target, calling the company a "key player" even after its recent pullback. Palantir sits in a "unique position" as an enabler of AI implementation across commercial and government sectors, she said. PLTR 1M mountain Palantir shares over the last month "We think PLTR's ability to provide genAI solutions, agnostic to a preferred LLM (large language model), compliant to tight security requirements, with demonstrated use cases across sectors, has not been fully appreciated by the market," she wrote in a Monday note to clients. Palantir has benefited this year from the buzz around all things AI. But after a blowout start to the year, the rally hit a wall in August, with shares falling about 23%. The stock is up nearly 138% year to date. Based on Bank of America's price target, Perez Mora sees more upside in store, with the $18 objective implying shares could rally another 23% from Monday's close. Key to Palantir's growth story is its recently released AI platform, which fuels the growing need for secure and reliable data infrastructure, Perez Mora said. She expects heightened demand to come from both new and current customers. "LLMs broaden the end user base and use-cases for PLTR products," she said. "As the company refocuses around AIP, we expect to see meaningful growth." The company's strong relationships with government service providers, including the U.S. Department of Defense's modernization efforts, is key to its unique position in the field, Perez Mora said. Other potential catalysts for Palantir include a contract with the National Health Service in the U.K. and its potential inclusion in the S & P 500. Admittance into the broad-based index could help lure more institutional investors to the stock and decrease its volatility, she noted. Shares gained more than 5% Tuesday. — CNBC's Michael Bloom contributed reporting.