Why Palantir keeps winning new government contracts
Imagine this: an American data platform that catches fraud, helps prevent terrorism, and might soon optimize your tax data. That’s Palantir. And the stock is skyrocketing.
On Friday, Palantir (PLTR) rose more than 5%, and it’s already up nearly 70% in 2025. That makes it the best-performing stock in the Nasdaq 100 so far this year.
What makes Palantir so special?
Palantir sells software that helps large organizations – like the U.S. government – understand and use complex data. Its most well-known product is Foundry. Think of it as a super brain that connects many different data sources and delivers smart insights quickly.
According to The New York Times, Foundry is now used by at least four U.S. agencies, including Homeland Security and the Department of Health and Human Services . Even Fannie Mae, the massive government-backed mortgage company, is now using Palantir to detect fraud worth millions.
Is this hype or real growth?
That’s the question many investors are asking. But Palantir’s numbers tell a strong story:
- First full year of real net profit in 2023
- Gross margin above 80%
- Over $2.9 billion in cash
- Low debt levels
And most importantly: they’re generating positive free cash flow. That’s rare for a young AI-focused company.
Why is everyone talking about Palantir and AI?
Palantir is trying to rebrand itself as an AI platform for governments and big business. They call it AIP – an AI pilot for large organizations. If it works, they’re entering a market worth hundreds of billions.
Sound ambitious? It is. But even the IRS and Social Security Administration are now reportedly talking to Palantir about working together .
But isn’t the stock too expensive?
Palantir isn’t cheap:
- P/E between 75 and 90 (based on projected profits)
- EV/EBITDA around 40
- P/S between 14 and 16
Still, these are not unusual valuations for a company combining AI with national security. Especially if they can maintain their 20–25% annual growth.
What are the risks?
There are plenty:
- Heavy dependence on U.S. government contracts
- High stock-based compensation, which dilutes shareholders
- Strong competition from tech giants like Google and Microsoft
And, of course, there are the usual risks tied to geopolitics and AI regulation.
So what should you do as an investor?
If you believe in AI and the growth of government software, Palantir is worth considering. The stock is expensive – but so was Nvidia, once. You just need to stomach the volatility.
Palantir is not for the faint of heart. But it could become something special over the long run.
What about you?
Would you take a chance on Palantir as a growth stock for the next 5 years? Or are you waiting for a cheaper entry point? Let us know!
