One Wall Street Analyst Just Added Palantir to Its Top Investment List and Says It Could Climb 35%. Time to Buy?

Right now is an exciting moment for Palantir Technologies (NYSE: PLTR). It's set to join the S&P 500 index on Monday, showing that the company is one of today's leaders.

The stock has soared more than 100% so far this year, even climbing in recent weeks when other tech stocks have stumbled. And Palantir is starting to see big results from the launch of its Artificial Intelligence Platform (AIP) last year.

On top of this, Bank of America recently added Palantir to its list of top investments and predicts the shares could rise 35% from their current level. The bank selected the stock for its U.S. 1 List and expressed optimism about its addition to the S&P 500 and long-term prospects. The list represents the bank's favorites among its buy-rated stocks.

Is it time to follow Bank of America's advice and buy Palantir shares? Let's find out.

Palantir's biggest growth driver

First, a look at Palantir's path so far. For many years, the company was associated with government contracts, and these were its biggest growth driver. But in recent times, its U.S. commercial business has emerged as having great potential for Palantir. It has seen these customers increase from just 14 four years ago to nearly 300 today.

And those customers span a wide range of industries. Palantir recently extended its agreement with oil company BP to "improve and accelerate human decision-making" and signed a new deal with fast-food chain Wendy's that will first focus on decision-making and then include supply chain management and waste prevention.

In the most recent quarter, U.S. commercial revenue soared 55% and commercial-customer count increased 83%, showing strong momentum here. On top of this, the company posted $134 million in net income in the quarter, its highest quarterly profit ever.

Now, let's consider what's ahead. The growth we've seen in the commercial business along with the fact that it is driven by Palantir's AIP is reason to be optimistic.

Artificial intelligence is one of today's highest-growth fields, with companies hoping to use the technology to become more efficient and profitable. AIP is showing these customers and potential customers (through company "boot camps" that allow them to test the platform) how they can do this, and then AIP delivers on those promises -- so we could imagine demand for AIP continuing.

Transforming Palantir's business

CEO Alex Karp emphasizes this idea, saying that demand for AIP "shows no sign of relenting" and that the platform "has already transformed our business." The general AI market is expected to climb from $200 billion today to $1 trillion later this decade, suggesting that AIP, which is helping customers reach their AI goals, could continue to drive growth at Palantir.