Palantir Technologies is poised to continue capitalizing on artificial intelligence opportunities in the software industry, according to Goldman Sachs.

The investment bank upgraded the software stock to buy from neutral. It has a 12-month price target of $230 on shares, implying 18% upside from Thursday’s close.

Palantir shares gained 2.7% in premarket trading.

“The [total addressable market] may be setting up for another step function change in depth, because of the shift to sovereign AI, bespoke applications, and Palantir … has sustained itself even with competitor investments,” analyst Gabriela Borges said Thursday in a note to clients.

Borges added that Palantir has an edge over its peers due to its forward deployed engineering model — a strategy that “requires tight feedback loops between field and product, which Palantir has perfected to the point of being able to automate via AI [engineers],” Borges wrote.

She also said that companies’ efforts to integrate AI into their businesses are just beginning, and the trend should be a considerable source of upside for Palantir.

“We believe enterprises are in the early stages of applying AI to their proprietary data to amplify their existing moats,” Borges wrote. “There are signs of what this looks like in the Software sector, with CrowdStrike introducing its SafeMind cyber frontier model, and Datadog applying the Adaptive ML researchers to its time series forecasting data.

“However, while Software companies are generally sophisticated enough to ramp these projects with their own or acqui-hired engineering talent, we expect industries with lower tech talent density to be an opportunity for Palantir.”

Goldman Sachs’ call falls in line with consensus on Wall Street. Of the 33 analysts covering Palantir, 23 have a buy or strong buy rating on the stock, LSEG data shows.

Shares of Palantir have jumped nearly 47% over the past three months.