Palantir Technologies: Rising Star in Military AI Innovations
Last year, discussions about big tech transforming the world with artificial intelligence (AI) dominated the conversation. The “Magnificent Seven” stocks — Nvidia, Microsoft, Apple, Alphabet, Meta Platforms, Amazon, and Tesla — established AI as a major trend, significantly influencing the market landscape.
However, smaller companies are beginning to challenge this dominance. Palantir Technologies (NASDAQ: PLTR) has emerged as a potential contender, showing promise in sustaining long-term competition against larger firms.
Currently, Palantir holds the title of the top-performing stock in the S&P 500 for 2024, primarily fueled by excitement around its latest software suite, the Artificial Intelligence Platform (AIP). While AIP has quickly gained traction over the past year, many investors are taking note of its applications in the private sector.
In this article, I will highlight a lesser-known area where Palantir is quietly leading the way, expected to drive significant growth in 2025.
The Untapped Potential of Military AI
For two years, investors have heard about AI’s transformative potential for workplace productivity and revolutionary technologies like humanoid robots and self-driving vehicles. Yet, a critical area often overlooked is the role of AI in the defense sector, particularly within military operations.
According to Mordor Intelligence, military AI applications, including data analytics and robotics automation, create a total addressable market exceeding $60 billion. Below, I will delve into some significant achievements that Palantir has already accomplished in this domain.
Image source: Getty Images
Palantir’s Stronghold in the Defense Sector
Palantir’s public sector operations are noteworthy, as the company collaborates with both government agencies and technology firms aiming to participate in defense initiatives. Earlier this year, Palantir partnered with Microsoft to integrate AIP into Microsoft’s Azure cloud infrastructure, specifically in secure environments for the Department of Defense (DOD).
Recently, Palantir established another alliance with Amazon Web Services (AWS), showcasing how Amazon’s large language model (LLM) Claude can work in conjunction with AIP across various defense agencies.
Furthermore, Palantir has joined forces with Meta, where its LLM (named Llama) will utilize Palantir’s capabilities to enhance its public sector engagements.
Expanding Horizons through New Contracts
In addition to its partnerships with major tech companies, Palantir has secured numerous lucrative federal contracts in recent months. Notable examples include a multiyear contract valued at up to $100 million as part of its Maven project, alongside a deal valued at nearly $1 billion with the Naval Information Warfare Center (NIWC).
Beyond government contracts, Palantir has formed alliances with innovative companies like Anduril, known for developing autonomous systems like underwater drones. Additionally, the company has partnered with Booz Allen Hamilton, a leader in government consulting.
Conclusion: A Promising Future
Palantir has long held a strong position in the public sector, particularly with U.S. government agencies. Its recent contracts and partnerships underscore the company’s ongoing momentum and suggest that government investments in AI are on the rise, with Palantir consistently benefitting from such engagements.
As these various collaborations and agreements come to fruition, the company’s U.S. government business is likely to see significant growth next year.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, serves on The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is also a board member. Adam Spatacco has investments in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, and Tesla. The Motley Fool holds positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, and Tesla. The Motley Fool advocates for Booz Allen Hamilton, and also recommends long and short options regarding Microsoft. The Motley Fool has a disclosure policy.
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