Palantir Thrives Amid Defense Contracts and AI Buzz
Navigating a Successful Finish to 2024
Palantir (NASDAQ: PLTR) enjoyed a strong performance in December, with its stock rising by 12.7%, as reported by S&P Global Market Intelligence. The company has positioned itself among 2024’s standout stocks, bolstered by new contract wins and a strategic partnership poised to impact the defense industry.
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Palantir Expands Its Reach in Defense
In December, Palantir continued to secure significant wins within the defense sector. On December 6, it announced a partnership with Booz Allen Hamilton aimed at enhancing U.S. defense technology. Shortly after, Palantir expanded its contract with U.S. Special Operations Command, worth $36.8 million over a year, to deliver technology solutions and support services.
On December 18, it was revealed that Palantir secured a four-year extension with the U.S. Army, which could yield around $400.7 million, potentially climbing to about $618.9 million with additional provisions. The company’s strong public sector momentum suggests continued opportunities ahead.
Further, a December 22 report from The Financial Times highlighted that Palantir and Anduril, a defense technology innovator founded by Palmer Luckey, are exploring the creation of a cutting-edge defense consortium. Anduril, like Palantir, has begun to attract U.S. defense contracts.
What’s Next for Palantir Stock?
Palantir is experiencing an impressive growth trajectory. Following its gains in 2024, the company’s stock climbed an additional 3.5% at the start of 2025. Early indicators, alongside excitement in the artificial intelligence sector, point to promising business results. In the third quarter, Palantir’s revenue surged by 30% year-over-year, reaching $726 million.
During this period, net income doubled to $149.3 million, and adjusted free cash flow tripled to $434.5 million. With a net income margin of 20% and a free cash flow margin of 60%, Palantir displays remarkable profitability while also maintaining considerable room for future growth.
However, investors should be mindful that much of this growth is already factored into Palantir’s valuation. The company currently trades at around 168 times its anticipated earnings for the year and approximately 52 times its expected sales. While Palantir shows promise as a strong business, its valuation tied to growth expectations can lead to price volatility.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Palantir Technologies. The Motley Fool recommends Booz Allen Hamilton. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
