Is This The Best Defense Stock to Buy On the Dip Amid Ongoing Middle East Conflict?

Palantir Technologies Inc (NASDAQ:PLTR) is one of the Cathie Wood 2026 Portfolio: 10 Best Stocks to Buy.

Cathie Wood’s ARK decreased its stake in Palantir Technologies Inc (NASDAQ:PLTR) by 20% in the fourth quarter to $574.5 million. Overall, the stock saw an increase in hedge fund sentiment as 89 funds in Insider Monkey’s database reported positions in the company in the fourth quarter, up from 81 funds in the previous quarter.

Palantir Technologies Inc (NASDAQ:PLTR) is down 10% so far this year, but some believe it’s positioned to rebound amid rising geopolitical tensions across the globe. The company makes AI-powered battlefield software and data analytics systems used by militaries and governments for surveillance and defense purposes. Four of the US government’s major defense contractors use Palantir software. Palantir Technologies Inc (NASDAQ:PLTR)’s commercial business growth has risen over the past few quarters due to the adoption of its AI platform (AIP). It is also looking to diversify its business and form partnerships with other countries beyond the US.

Legacy Ridge Capital Management stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its fourth quarter 2025 investor letter:

“At the very least, recent performance for the broader indices is long in the tooth. Most valuations are stretched and some are just bat*hit crazy. We had similar sentiments back in 2019 and wrote about it. Back then the posterchild of the speculative mania was Tesla (TSLA). Now there are dozens of candidates, including TSLA still, but Palantir Technologies Inc. (NASDAQ:PLTR) may be in the pole position. We admit we don’t completely understand what the company does, but it seems super cool. What we do understand is basic arithmetic, and when the CEO goes on CNBC and passionately attacks short sellers, who are just betting the stock is expensive, and he says, “pick something that is not doing a noble task”, not once mentioning valuation during the 10-minute interview, the hair on our neck stands up. We don’t short (we don’t particularly like that math either), but the implied math around Palantir’s valuation is concerning.