Palantir's Under-The-Radar Opportunity for 2025

The launch of the Palantir Artificial Intelligence Platform (AIP) in 2023 has opened new doors for the company. However, one aspect seems to be gaining less attention than it deserves.

In the past year, discussions have mainly revolved around how major tech firms are set to transform the world through artificial intelligence (AI). The so-called "Magnificent Seven" stocks—Microsoft, Apple, Alphabet, Meta Platforms, Amazon, Tesla, and Nvidia—have been leading the charge as AI emerges as the next big trend.

Yet, smaller companies are making significant strides and proving they can compete effectively. One such company is Palantir Technologies (PLTR), which has potential for long-term growth despite the presence of larger competitors.

Currently, Palantir stands out as the best-performing stock in the S&P 500 for 2024, largely thanks to excitement surrounding its new software offering, the Artificial Intelligence Platform (AIP). However, while many investors focus on how AIP is being utilized in the private sector, there's another opportunity that may be just as vital.

Military AI Presents a Major Opportunity

For the last couple of years, much of the investment discussion has centered on how AI will enhance workplace productivity and pave the way for groundbreaking technologies, such as humanoid robots and self-driving vehicles. However, one area that is frequently overlooked is the role of AI in military operations.

According to analysis from Mordor Intelligence, the market for AI applications in the military is substantial, with a total addressable market exceeding $60 billion. This includes data analytics and robotics automation. Below, I will highlight some of Palantir's significant achievements in this sector.

Palantir's Stronghold in the Defense Sector

What stands out about Palantir's activities in the public sector is its collaborative approach. The company works not only with government entities but also forms partnerships with technology firms aiming to engage in defense-related activities. Earlier this year, Palantir and Microsoft collaborated to integrate AIP into Microsoft's Azure cloud, focusing on secure environments for the Department of Defense (DOD).

More recently, Palantir joined forces with Amazon Web Services (AWS), showcasing how Amazon's large language model, Claude, can now work alongside AIP within defense agencies.

In addition, Palantir formed a partnership with Meta to utilize its language model, Llama, in similar ways.

New Opportunities are Emerging

Palantir has also successfully landed several high-value federal contracts in recent months. Notable wins include a multi-year deal potentially worth up to $100 million as part of the Maven contract, alongside a nearly $1 billion agreement with the Naval Information Warfare Center (NIWC).

Beyond partnerships with large tech players, Palantir has forged interesting alliances with non-tech companies as well. For instance, the company is collaborating with Anduril, a startup specializing in autonomous systems like underwater drones. Furthermore, Palantir has partnered with the consulting firm Booz Allen Hamilton.

The Final Thoughts

While Palantir has had a consistent presence in the public sector, especially with U.S. government clients, the array of recent deals and partnerships exhibits the company’s ongoing growth trajectory. These developments suggest that the government is boosting its investments in AI, with Palantir standing to gain significantly.

Looking ahead, Palantir's U.S. government business may experience a significant uptrend as its various partnerships and contracts yield results.

Palantir, AI, Defense