A little over 10 years ago, I had a curious encounter on the metro in Washington, D.C., that ended up changing my life.
While mindlessly scrolling on my iPhone to pass the time, I noticed a man cruising on his laptop in the seat across from me. He was wearing a black winter beanie that said “Palantir” on it. Curious about what it could mean, I went onto Google and searched for Palantir.
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Unbeknownst to me, Palantir Technologies (NYSE: PLTR) was a data analytics software developer specializing in defense technology for the U.S. military. From that moment on, I continued monitoring Palantir over the years and was particularly excited when the company finally went public back in late 2020.
Fast-forward a few years, and now Palantir has emerged as a major force within the artificial intelligence (AI) realm. Below, I’m going to break down how AI is making waves in the defense sector and why I see Palantir as a no-brainer stock to watch as the military doubles down on defense tech.
When it comes to AI, you probably think about applications related to workplace productivity, robotics, or even drug discovery capabilities. The subtle thing about use cases like these is that they tend to be viewed in a positive light. In other words, people enjoy talking about them and therefore they end up getting a lot of coverage.
The defense industry is different. While it’s pretty well known that government contracting is an enormous business, I think it’s fair to say that most people try to refrain from talking about the business side of the military. But the fact of the matter is that the federal government (including the Pentagon) has many of the same needs and pain points as a private corporation. Just like any organization, defense agencies keep track of budgets, undergo long and strict procurement processes, and have to monitor things such as headcount and inventory.
During times of geopolitical unrest, the importance of cybersecurity and data analysis becomes even more pronounced — as it’s mission-critical to provide the tools required to make informed decisions quickly and efficiently. And that’s where Palantir enters the picture.
During much of 2024, Palantir has quietly announced a number of big contract wins with the Department of Defense (DOD). Megacap tech behemoths Amazon and Microsoft have noticed Palantir’s strong presence within the defense sector, and both companies have integrated Palantir’s Artificial Intelligence Platform (AIP) with their respective cloud infrastructures, Azure and Amazon Web Services (AWS). These partnerships are focused on enhancing security protocols within the DOD.
