Palantir Setting Up to Be a Big Winner With New Defense Spending

Key Points

• Palantir showcased a long list of new public and private sector customers at its AIPCon event in March.
• The company’s alliance with Archer Aviation and Anduril may fundamentally change the nation’s defense industry.
• Palantir’s inclusion in the S&P 100 is a major factor in the stock’s future direction.

There’s no shortage of news about Palantir Technologies Inc. NASDAQ: PLTR. At its AIPCon event on March 13, the company showcased a long list of companies in the public and private sectors that are now working with it.

Despite a steady stream of new contracts, most analysts remain fixated on Palantir’s valuation, which is understandable for short-term traders. Even among technology stocks, PLTR looks expensive at current levels.

However, long-term investors may focus more on the company’s growing role in defense. Palantir continues to secure contracts while staying aligned with its mission to transform national security.

Why Palantir’s Partnerships Signal a Shift in Modern Warfare

The wars of the future will not be fought with the technology of the past. That’s one reason that Palantir is aligning itself with Archer Aviation Inc. NYSE: ACHR and Anduril to create a coalition of U.S.-based defense contractors that combine cutting-edge aerial mobility, autonomous defense systems, and AI-enabled data insight. 

The idea is that combining the best capabilities of these three revolutionary firms will disrupt the current thinking of how national defense is designed, deployed, and scaled. 

Why Is Palantir’s Partnership With Archer Significant?

Initially, Archer will leverage Palantir’s Foundry and Artificial Intelligence Platform (AIP) to optimize and streamline Archer’s manufacturing operations as it begins to build its Midnight eVTOL aircraft at scale. However, the two companies have broader ambitions involving the development of next-generation software solutions to improve essential aviation functions, including improved air traffic control.

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Why Is Palantir’s Partnership With Anduril Significant?

To repeat, the weapons of warfare are changing. That’s clearly seen in the Russia-Ukraine war, in which drone swarms are mitigating the need for fighter jets. While many believe that old-school defense contractors like Lockheed Martin Corp. NYSE: LMT will lead the way, that hasn’t been the case with drone technology. For now, that leadership role goes to Anduril. That's why this partnership makes so much sense. 

Palantir Is Growing Its Government Business

The alliance also serves as a reminder that while Palantir is stacking up an impressive list of clients on the commercial side, it’s in no danger of losing contracts on the government side of its business which makes up more than 50% of the company’s revenue. That concern was one of several reasons that the PLTR stock price plummeted nearly 40% after reaching an all-time high of around $125 per share on February 18.

The formation of this alliance goes along with several contracts the company has won since January 2024, including:

• U.S. Army Contract Extension: In December 2024, Palantir secured a $400.7 million contract to continue providing its AI-enabled Vantage system, which serves as the Army's main data platform.

• Pentagon's AI Office Contract: In June 2024, the Pentagon's Chief Digital and Artificial Intelligence Office awarded Palantir a $33 million contract to develop a data-sharing ecosystem.

• U.S. Army TITAN Contract: In March 2024, Palantir won this $178 million contract over RTX Corp. NYSE: RTX. This was the first time a software company had worked as a primary contractor for a significant hardware program. Palantir delivered the first two TITAN systems in March 2025.

The Irresistible Force Driving PLTR Stock Higher

On March 24, Palantir stock began trading as part of the S&P 100. That’s an exclusive club that confirms what’s been happening with PLTR stock since September 2024. At that time, the company was included in the S&P 500 and has since begun trading on the NASDAQ exchange.

All of this leads to a simple conclusion: Many institutional investors will have little choice but to buy Palantir’s stock, regardless of its valuation. That is likely to make $75 a much more realistic floor for PLTR stock.

Analysts seem to agree. On March 13, Loop Capital reiterated its Buy rating on Palantir stock. Although the analyst firm did lower its price target from $141 to $125, the new target is notably higher than that of Dan Ives from Wedbush, who has a $120 price target on PLTR stock.