Source: finance.yahoo.com
Palantir Technologies (NYSE:PLTR) shares gained around 1% in premarket trading on Friday after reports that a U.S. government agency had withdrawn a procurement process for a military intelligence system following a formal protest by the software company.
The development is viewed as a positive outcome for Palantir as it continues to expand its presence within the U.S. defence sector.
Defense Intelligence Agency halts procurement process
According to Bloomberg, the Defense Intelligence Agency (DIA) requested the withdrawal of the contract solicitation.
An agency spokesperson confirmed the decision, which affects a military intelligence platform used to support operations around the world, including mission planning and targeting activities.
The move temporarily pauses the agency’s efforts to upgrade an artificial intelligence-enabled intelligence system.
Palantir challenged the procurement
Palantir filed a formal protest in May, arguing that the government was pursuing the development of a new intelligence platform despite the availability of commercially deployed software capable of meeting its requirements.
According to people familiar with the matter cited by Bloomberg, the company maintained that existing commercial solutions could deliver the required capabilities without developing an entirely new system.
Decision strengthens Palantir’s position
While the withdrawal does not determine the future of the procurement, it represents a procedural win for Palantir as the government reviews its acquisition strategy.
The company has continued to expand both its valuation and its business with U.S. defence agencies during the second Trump administration, benefiting from growing demand for artificial intelligence software across military and national security applications.
Palantir Technologies stock price
This article first appeared on GuruFocus.
Palantir Technologies (PLTR, Financials), the data analytics and artificial intelligence software business, was back in the analyst spotlight after Citi upgraded its earnings predictions on hopes for greater commercial growth.Citi analyst Tyler Radke said Palantir’s U.S. commercial division might recoup from an unexpected soft patch in the first quarter. “Better resource allocation and wider use of the company’s Artificial Intelligence Platform across industries and regions,” he said.Radke now predicts fiscal 2027 sales growth of 53%, above the about 45% estimate on Wall Street. He expects commercial revenue to be up 67% from a year ago.Citi maintained a Buy rating but dropped its price objective to $200 from $225, citing pressure on valuation multiples.Recent checks with partners and management were favorable in both commercial and government operations, the business said. It also pointed to customer growth in legal services, cloud infrastructure and overseas markets.Palantir’s federal business could benefit from broader defense use cases and government contracts, and partnerships with systems integrators and software vendors could support additional adoption.The stock has been a laggard relative to a software sector benchmark since its last quarterly report, which Citi said increased the risk-reward profile.Investors will now watch if US commercial growth picks up and supports further estimate revisions through fiscal 2027.
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Palantir’s software can’t be replicated
The secret behind Palantir’s success is its revolutionary software. The company collects data points from thousands of sources, including satellites, to provide real-time insights to commercial customers and government agencies. CEO Alex Karp described how the company works in a 2025 interview.
But the magic really began when Palantir incorporated its Artificial Intelligence Platform (AIP) into its Foundry and Gotham products, which allow users to pose detailed queries, automate tasks, and have AI propose and complete real-world tasks.
Three years after launching AIP, Palantir is continuing to grow at a staggering pace. Revenue in the first quarter was $1.63 billion, up 85% from a year ago. The company said its U.S. commercial revenue jumped 133% from a year ago to $595 million, and U.S. government revenue increased 84% to $687 million.
The company closed 206 deals in the first quarter, with at least $1 million each, 72 of them at least $5 million, and 47 at least $10 million. Overall, in the quarter, Palantir closed $2.41 billion in total contract value.
The company increased its full-year guidance, now calling for revenue in a range of $7.650 billion to $7.662 billion. Previous guidance was for revenue between $7.182 billion and $7.198 billion.
The valuation is improving
The biggest red flag for many investors has been Palantir’s staggering valuation — or, perhaps, its once-staggering valuation. In December, Palantir’s forward price-to-earnings ratio was more than 240, and its forward price-to-sales ratio topped 90. But those numbers moderated in the first half of this year.
Yes, Palantir is still expensive. But it’s a unique company providing software that is changing the way businesses operate, from managing supply chains to tracking inventory to conducting competitive analysis. And its military applications are significant enough that the Pentagon is making its AI-powered Maven Smart System an “official program of record,” which would streamline Maven’s adoption across all branches of the military and provide Palantir with long-term funding.
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