What's Going On With Palantir Technologies Stock Today?

Palantir Technologies Inc PLTR is facing a slowdown in revenue growth from U.S. government contracts, leading to a decline in its stock market performance.

Rishi Jaluria from RBC Capital Markets observes that government agencies seek more cost-effective and flexible tech solutions than Palantir’s.

CEO Alex Karp acknowledges the cyclical and challenging nature of government business compared to commercial ventures, the Wall Street Journal reports.

The competition intensifies as Deloitte and Booz Allen Hamilton Corp BAH secure more government data analytics contracts.

The company faced its share of other challenges. Earlier in 2024, reports indicated that the U.K.’s National Health Service (NHS) was investigating a possible breach of Palantir’s contract terms after securing a controversial deal.

Palantir also chose to tap the higher demand for its products in Israel amid the conflict with Hamas.

In an interview in Tel Aviv, CEO Alex Karp mentioned that Palantir is providing different products than before.

Palantir hosted its most recent board meeting in Tel Aviv, Israel, to express solidarity with Israel. The company also collaborated with the Israeli military to provide technological support to its war efforts.

Brent Thill, an analyst at Jefferies, cautions about the overhyped stock due to AI euphoria and the deceleration in government business, the WSJ writes.

Analysts at William Blair have also noted the increasing competition Palantir faces in securing new defense contracts.

Despite these challenges, Palantir continues to promote its crucial role in modern combat and support for U.S. allies in international conflicts.

Karp is banking on the company’s new AI platform to drive future growth, though some investors, like those at Antipodes Partners, remain skeptical.

Despite a growing commercial business with clients like Exxon Mobil Corp XOM and Airbus SE EADSF EADSY, Palantir faces challenges expanding to other European governments due to data privacy concerns.

Analysts estimate that Palantir’s revenue was about $2.2 billion last year, with 43% derived from the U.S. government. The company’s next version of the Army data platform Vantage will incorporate new technical approaches and additional software vendors, indicating a shift away from exclusive reliance on Palantir.