Pentagon Tests AI Models By Microsoft, OpenAI To Ease Transition From Palantir, Lockheed Martin

In a bid to reduce dependency on vendors like Palantir Technologies Inc. PLTR and Lockheed Martin Corp. LMT, the Pentagon is experimenting with AI models from Microsoft Corp. MSFT and OpenAI.

What Happened: The Pentagon and other federal agencies are evaluating AI models developed by Microsoft and OpenAI. These models are designed to extract data from analytics applications managed by contractors such as Palantir and Lockheed Martin, as reported by investing.com on Monday.

The aim is to potentially free customers from vendor lock-in situations.

Major tech companies, including Amazon.com Inc. AMZN, Microsoft, and Salesforce.com Inc. CRM, are developing AI tools to simplify platform transitions for their customers.

These tools can write code to transfer corporate data between applications or convert older programs into newer formats.

These AI capabilities could be used as leverage in contract negotiations with current providers like Palantir, as they could threaten to move agency data to competing analytics platforms such as Microsoft’s Power BI.

Why It Matters: This development comes in the wake of a growing interest in AI technologies. Just earlier this month, tech analyst Dan Ives of Wedbush Securities raised his price target for Palantir, citing the company’s AI strategy as a key factor.

On the other hand, Microsoft has been under scrutiny for its China-based tech support for Pentagon projects. The company’s decision to discontinue this support could have influenced the DoD’s decision to explore alternative AI models.

Meanwhile, Palantir’s position in the AI landscape has also been a topic of debate, with co-founder Joe Lonsdale outlining a six-layer AI investment framework that raises concerns about the company’s competitive position.

Price Action: Palantir shares dipped 0.58% on Monday to close at $157.88, but gained 0.39% in premarket trading on Tuesday, according to Benzinga Pro data.

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