Outperforming fund manager says this software stock is set to be a 'serious player' in a corner of AI, gives it nearly 60% upside

Published Mon, Mar 18 20247:08 PM EDT

One stock is a "promising AI investment" and set to be a "serious player" in a corner of the space, according to Brian Stutland of Equity Armor Investments. That's Palantir , known for its government contract work in defense and intelligence. "They're doing more than just their cybersecurity for the government. They are really starting to become very creative in the AI world," Stutland, a portfolio manager at the firm, told CNBC's "Street Signs Asia " last week. In February, Palantir CEO Alex Karp told shareholders that demand for large language models in the U.S. "continues to be unrelenting." Palantir has been scaling its Artificial Intelligence Platform, or AIP, and Karp said the company carried out nearly 600 pilots with the technology last year. "We're in the very beginning stages, but from military identifying objects on the military field to all kinds of different artificial intelligence that can be used to help better our security and better our military," Stutland added. Shares of Palantir jumped nearly 10% on March 6 after Palantir announced its Tactical Intelligence Targeting Access Node was selected by the U.S. Army . TITAN uses artificial intelligence to provide targeting information for missiles. Palantir generates the bulk of its revenue through government contracts. Its government segment makes up nearly 56% of total sales. The rest of its sales are commercial. "They're going to be in play and they're going to be a serious player in this area," he said of the firm's efforts in producing AI applications for military and defense. Stutland manages the Rational Equity Armor Fund, which has so far been among this year's top performers, ranking in the top 5% of options trading funds, according to Morningstar. He gave the stock a price target of $37, implying 57% upside. Shares of Palantir are up around 41% year-to-date. Last week, tech analyst Dan Ives of Wedbush Wedbush Securities raised his price target for Palantir from $30 to $35, and maintained his outperform rating for the stock. He said, "Our recent checks on Palantir in the field have been incrementally more bullish as we believe the [Artificial Intelligence Platform] foundation is becoming viewed by many US enterprises as the 'launching pad of AI use cases.'" He called the AIP a "game changer." "With a strong product portfolio coupled with AI, we expect PLTR to garner a meaningful share of what we believe to be a $1 trillion AI Global TAM as enterprise and government ecosystems rush to implement useful platforms for automating complex workflows," Ives added. — CNBC's Ashley Capoot and Keris Lahiff contributed to this report.