Palantir Technologies (PLTR +2.53%) has been perhaps the top artificial intelligence (AI) stock to own over the past three years, rewarding shareholders with higher gains than top hardware players like Nvidia and Broadcom.
The company offers several AI-powered data analysis platforms that reach various constituencies, and it has become a key partner for the U.S. military -- so much so that President Donald Trump called it out by name last week. Here's what it means for the stock.
High-speed AI analytics
Palantir's Gotham platform is built to organize and analyze disparate data sets for militaries, intelligence agencies, and law enforcement agencies. The company calls it an "operating system for global decision making." For example, it can gather and analyze footage from various sources, including satellites and drones, providing key insights on targets. The Maven Smart System (MSS) is a platform component that accelerates detection speed and enables the military to make quick combat decisions. In 2024, the U.S. military expanded its deal to use MSS into a five-year, $100 million contract.
While Palantir doesn't release specifics on its roles in defense and intelligence, aside from noting its contracts with various government customers, Trump highlighted it in a post on Truth Social last week, writing: "Palantir Technologies (PLTR) has proven to have great war-fighting capabilities and equipment. Just ask our enemies!!!" Palantir stock, which had been declining this year, jumped shortly after the post.
Image source: Getty Images.
Military, defense, and more
That Palantir is playing a key role in supporting U.S. operations in the Iran war indicates that it's maintaining its position and edge in this AI-driven space. Palantir bears will point out that the company's proprietary systems can be copied and replaced, but the company dominates its field and has lucrative long-term contracts that create higher barriers to entry for potential rivals. It also has multiple platforms and capabilities that all work together, forming a cohesive system that can't easily be replicated. Its accuracy on the battlefield, as suggested by the president's remarks, implies that if anything, the U.S. military is likely to expand its partnership with Palantir.
The company, meanwhile, continues to grow rapidly, and its efficient operations drive robust profitability. It has several dedicated segments that address both civilian and military needs, and it has been forging new deals and expanding existing ones.
In 2025's fourth quarter, total revenue increased 70% year over year, driven by U.S. revenue growth of 93%. It closed 61 deals worth at least $10 million each and 180 deals worth at least $1 million apiece. It ended 2025 with $4.3 billion in total contract value, 138% higher than the year before, and its customer count was up by 34%.
Based on what we're hearing, Palantir's systems are proving useful in the Iran war, which is boosting confidence in them, as if there wasn't enough before. That's helping solidify its place in AI and protecting its economic moat, and it could result in extended contracts with the U.S. government and other defense organizations.
NASDAQ: PLTR
Key Data Points
What it means for investors
The investment thesis for Palantir has become complicated. It's obvious that the company runs a growing and disciplined business, and that it has enormous opportunities. However, the stock is trading at extremely expensive levels. That hasn't stopped it from skyrocketing previously, but in recent months, the market has finally begun taking that into consideration. Palantir stock is down about 33% from the all-time high it touched in early November.
Even at its current lower price, Palantir stock trades at 220 times trailing-12-month earnings and 80 times trailing-12-month sales. There's a lot of expected growth baked into that price, even if its price/earnings-to-growth (PEG) ratio is slightly less than 1, which could imply a mildly undervalued stock.
Palantir has some clear advantages that make it an excellent business, and its war-related efforts aren't going unnoticed. But even the president's confidence can only lift it so high at a time when its valuation is becoming more important to the market. Interested investors may want to wait for a better entry point before taking a position.
