After the Election: Diverging Paths for Booz Allen Hamilton and Palantir Technologies

Since Donald Trump was announced president-elect, the S&P 500 (SNPINDEX: ^GSPC) has gained roughly 2%, while the Nasdaq Composite (NASDAQINDEX: ^IXIC) has jumped by about 5%. Overall, these trends indicate that stocks have mostly been climbing over the past month.

However, two companies moving in opposite directions since the election are government consultant Booz Allen Hamilton (NYSE: BAH) and software firm Palantir Technologies (NASDAQ: PLTR).

From November 6 to market close on December 13, shares of Booz Allen fell around 25%, whereas Palantir’s stock skyrocketed by nearly 40%.

In early December, both companies announced a strategic partnership that could significantly impact their futures. This article examines their collaboration and its potential for long-term growth as the artificial intelligence (AI) era progresses.

What Factors Influenced Booz Allen and Palantir’s Stock Movements?

During his campaign, Trump pledged to create a new government agency tasked with identifying and cutting unnecessary spending to improve the federal deficit. As a consulting firm that works closely with the government, investors worried that this focus might harm Booz Allen’s business, likely causing the stock drop.

In contrast, Palantir already has significant ties with the U.S. government, especially the Department of Defense (DOD). For the nine months ending September 30, Palantir generated $1.1 billion in revenue from its public sector, marking a 24% year-over-year increase and accounting for about 55% of its total revenue.

With growing concerns over national security due to geopolitical tensions, along with military interests shifting towards AI, it’s clear why Palantir’s stock received a surge of investor support post-election.

Image source: Getty Images.

How Are Booz Allen and Palantir Collaborating?

Palantir is known for its high-quality software, but integrating that technology can often be complex and lengthy. Usually, software firms have a professional services team that helps new clients implement their tools effectively.

The partnership between Palantir and Booz Allen extends this concept. While Palantir focuses on AI software, Booz Allen provides the necessary expertise to implement these tools in specialized environments like the defense sector.

By targeting “information infrastructure modernization,” both companies aim to enhance the speed of military operations in this AI-driven age.

Why This Partnership Could Be Revolutionary

This agreement appears to be advantageous for both parties involved and could reshape their futures.

Booz Allen has quickly found a method to counter possible business slowdowns due to tighter scrutiny of the national budget. Additionally, teaming up with Palantir allows Booz Allen to engage with the AI movement. This strategy parallels Accenture‘s collaboration with Nvidia. Consulting firms are set to play a crucial role in AI implementation going forward, marking a positive step for Booz Allen.

For Palantir, collaborating with Booz Allen could lead to fresh opportunities for engaging with the government sector, potentially speeding up its revenue generation. In the past, the public sector’s deal flow has been unpredictable. However, Palantir has successfully sought ways to enhance its involvement with the U.S. government beyond just large defense contracts.

The partnership between Booz Allen and Palantir seems to offer mutual benefits, and observers are keen to see how it unfolds as AI continues to evolve.

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Adam Spatacco has positions in Nvidia and Palantir Technologies. The Motley Fool has positions in and recommends Accenture Plc, Nvidia, and Palantir Technologies. The Motley Fool recommends Booz Allen Hamilton and has the following options: long January 2025 $290 calls on Accenture Plc and short January 2025 $310 calls on Accenture Plc. The Motley Fool has a disclosure policy.

The views and opinions expressed herein belong to the author and do not necessarily reflect those of Nasdaq, Inc.