What happened

Shares of Palantir Technologies (PLTR 8.61%) charged sharply higher Friday, spiking as much as 10.8%. As of 3:22 p.m. ET today, the stock was still up 10.5%.

While the rising tide of the market no doubt added fuel to its increase, the catalyst that sent the artificial intelligence (AI) and data mining specialist higher was coverage initiation and bullish commentary from a veteran Wall Street analyst.

So what

Wedbush analyst Dan Ives initiated coverage on Palantir with an outperform (buy) rating and a $25 price target, which represents potential upside for investors of 55% compared to Thursday's closing price. But it was as much the analysts' bullish commentary that sent the stock soaring. 

"We believe Palantir has built an AI fortress that is unmatched," Ives said, positing that the company is "poised to be a major player in this AI Revolution over the next decade." The analyst cited Palantir's AI know-how and the potential to "capitalize on its data-driven foundation ... [to] harness the power of emerging [large language models] to enhance platform capabilities." 

The accelerating demand for AI will no doubt boost Palantir's fortunes over the coming year, as we're still in the early innings of the AI revolution.

Now what

I've long touted Palantir as a stock to buy, even before 2023 kicked off the AI revolution. The company recently generated a profit for the second consecutive quarter, and the rapid acceleration of AI will only further boost its fortunes.

To be clear, Palantir isn't cheap, selling for 14 times next year's sales. That said, I'd argue that it has been building its AI foundation for two decades and is well positioned to benefit from these strong, but still early stage, secular tailwinds.