Cloud Stocks: Palantir Enables Warfare?

Last month Palantir (NYSE: PLTR) announced its fourth quarter earnings that continued to outpace market expectations. The company continues to benefit strongly from its US government contracts.

Palantir’s Financials

Palantir’s revenue for the fourth quarter grew 70% to $1.41 billion, ahead of the market’s expectations of $1.33 billion. On an adjusted basis, net income came in at $0.25 per share, compared with the market forecast of $0.23.

Palantir’s US government revenues grew to $570 million, and U.S. commercial revenues to $507 million. The US government segment grew 66% over the year driven by the increasing number of contracts that it is signing with the Department of Defense.

For the full year, revenues grew 56% to $4.48 billion.

The company expects revenues of $1.532-$1.536 billion in the first quarter and revenues of $7.182-$7.198 billion for the year. Analysts were looking for revenues of $1.32 billion for the quarter and $6.22 billion for the year. 

Palantir’s Growth Focus

Last quarter, Palantir saw revenues from its US market grow 93% to $1.1 billion. The growth has been driven by both the government and the commercial sector. After the $10 billion contract signed with the US army earlier in the summer, the company recently entered into a $448 million contract with the US Navy. As part of the agreement, the US Navy will deploy Palantir’s Foundry and Artificial Intelligence Platform (AIP) across its Maritime Industrial Base (MIB) to accelerate the adoption of AI and autonomy technologies across the industrial base.

The initiative will aggregate data from ERP systems, legacy databases, and operational sources to identify bottlenecks, streamline engineering workflows, and support proactive risk mitigation. The US Navy will be able to access a more unified, data-driven approach to production management for faster, more informed decision making. Overall, the agreement is expected to modernize the Navy’s shipbuilding supply chain and accelerate its ship building capabilities.

Palantir is also collaborating extensively with Nvidia. Recently, it announced plans to tie up with Nvidia to build a first-of-its-kind integrated technology stack for operational AI. The solution will include analytics capabilities, reference workflows, automation features, and customizable, specialized AI agents to help accelerate and optimize complex enterprise and government systems. Palantir Ontology will integrate NVIDIA GPU-accelerated data processing and route optimization libraries, open models and accelerated computing.

The integrated offering will help customers with access to advanced, context-aware reasoning necessary for operational AI. Organizations will be able to leverage their data to power domain-specific automations and AI agents for more sophisticated operating environments. Together, the two companies want to accelerate their vision of converting data into actionable intelligence by integrating Nvidia’s advanced AI infrastructure with Palantir’s advanced AI systems.

Lowe’s is already teaming with them to create a digital replica of its global supply chain network to enable dynamic and continuous AI optimization. Supply chains are a complex, dynamic process to improve upon, and Lowe’s is counting on these new and emerging AI capabilities to make its process more dynamic.

Palantir Enabling Warfare?

While Palantir continues to showcase how it is improving complex business decision making, it is no surprise that it is also enabling a different kind of war. Since 2018, it has been helping the US Department of Defense deploy the Maven Smart System as a digital command center. The system is designated as a key military program that has significantly accelerated the war efforts. Some believe that the latest Iran conflict is the first major conflict where AI is being used for significant decision making.

During the US-led invasion of Iraq, a 2,000-strong American intelligence unit was tasked with identifying targets on the ground. In Operation Epic Fury that work is being done by a 20-member troop that is using Palantir’s Maven to choose and dismiss targets. Maven has not only reduced the workforce needed for a conflict like this, but it has also accelerated the sheer speed of targeted attacks. But was Palantir responsible for the mistaken school bombing in Iran? Experts believe not as AI would have been able to determine that the location was a school. Even so, there is a need to ensure that there is a right balance between AI tools and human intelligence.

Palantir’s stock is currently trading at $160.90 with a market capitalization of $370.1 billion. The stock had climbed to a 52-week high of $207.52 in November. The stock has climbed from the 52-week low of $66.12 that it was trading at in April last year.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

Photo Credit: Cory Doctorow/ Flickr

This segment is a part in the series : Cloud Stocks