Palantir Rides Epic Hot Streak Into Earnings Report

Can anything slow Palantir down?

The AI-powered, data-crunching defense tech company enters its earnings call today as the year’s hottest stock on the S&P 500 — and comes just after the company on Friday inked a new $10 billion contract with the US Army. Which all begs the question: Does the US defense industry have a new top dog?

Data Dump

Palantir’s 105% share price rise this year is impressive, but its 865% rise since the start of last year is impossible to ignore. While investors began pouring into the stock in earnest after last November’s election ushered in political allies of Palantir co-founder (and human species skeptic) Peter Thiel, its success is equally indicative of the shifting terms of warfare in an increasingly digital world. While Palantir’s shares have surged, traditional weapons-makers like Lockheed Martin and Boeing have been cast in the unfortunate role of the Pentagon’s “inflation shock absorber.” 

In fact, according to a recent Barron’s analysis, shares of so-called prime defense contractors — a list that typically includes Lockheed, Boeing, General Dynamics, Raytheon and Northrop Grumman — have been trading lower this year than they did when Congress passed the Pentagon purse-threatening Budget Control Act in response to the debt ceiling crisis in 2011.

As the old guard wanes, Silicon Valley is ready to step into the fray. So far this year, Palantir is the clear leader of the pack:

• In March, Palantir delivered its first two AI-powered Tactical Intelligence Targeting Access Node (TITAN) systems to the US Army, as part of a $178 million contract it won a year earlier; that marked the first time a software company had ever served as a primary contractor for a significant hardware program. Palantir also touts that it came in on time and on budget, a rarity in the defense contracting world. 
• Then in May, the Pentagon announced it’d be boosting an existing $480 million contract with Palantir for a separate AI-powered targeting system by an additional $795 million.

Consolidation Nation: The deal announced Friday is practically an admission from the Pentagon that Palantir has become an ubiquitous contractor. The $10 billion contract actually rolls up the roughly 75 contracts the company has with the US Pentagon into one gigantic, decade-long agreement, creating a “comprehensive framework for the Army’s future software and data needs,” according to a press release.