Efforts by the Department of Government Efficiency to restructure the federal government and cut spending could lead to gains for defense contractor Booz Allen Hamilton and software company Palantir , according to Bank of America. “We think the DOGE sell-off of the National Security Services (NatSecSvs) names is overdone,” analyst Mariana Perez Mora wrote in a Tuesday note to clients. “Though the NatSecSvs names continue to react negatively to DOGE-related news, we think the market is painting with a broad brush and creating a Buffet[t]-esque opportunity for investors. Current valuations ignore these companies’ reshaped portfolios with exposure to mission-critical and high-growth areas.” On top of DOGE’s efforts possibly leading to a bigger focus on readiness capabilities and enterprise IT, the analyst also believes that defense IT modernization is in the “early innings of a long-term up-cycle.” Amid the backdrop of emerging technologies changing the nature of warfare, Perez Mora sees sustained near-term growth in the high single-digits for the defense IT service sector. On that front, Booz Allen Hamilton is a key beneficiary, she said, noting that it has allowed the U.S. government to integrate commercial solutions and their providers by “advising on what, how, where and also performing the program management and oversight on behalf of the USG.” “They have been agile to adapt to the USG’s increasing willingness to work with [commercial off-the-shelf] solutions by partnering with companies like Palantir, Nvidia , C3 AI , Databricks and AWS ( Amazon Web Services ),” Perez Mora continued. The analyst has a buy rating on the stock, and her $210 price target implies about 64% upside from Monday’s close. That call is among the seven out of 14 analysts covering it on Wall Street that have a strong buy or buy rating, according to LSEG data. Meanwhile, six analysts have taken a neutral stance with a hold rating. The stock has underperformed the broader market this year, with shares falling about 0.5% year to date. By contrast, shares of Palantir – another key beneficiary – have soared in 2025, rising more than 54%. Perez Mora sees the stock positioned for even more growth as a result of DOGE’s efforts given its “focus on operationalizing data, establishing high-fidelity digital enterprise-twins and accelerating decision making.” “AI and data analytics are critical to unlock timely and better informed decision making – from cutting duplicative contracts, to improved logistics, to autonomous systems, to command, control and communications on the battlefield,” the analyst added in the note. With a buy rating on Palantir, Perez Mora has a target of $125, which reflects more than 7% upside potential, as of Monday’s close. By contrast, however, most of the Street is neutral on the name. Out of the 22 analysts covering Palantir, 13 have a hold rating, while only four have a strong buy or buy rating. Its 12-month consensus target of around $88 reflects more than 24% downside from here.
