100 million reasons to love Palantir stock right now

I’m a big believer in looking for subtle, less obvious opportunities that lie in the shadow of broader megatrends.

When it comes to artificial intelligence (AI), I believe its applications in the defense sector are underappreciated – if not misunderstood. Though Palantir Technologies (NYSE: PLTR) has emerged as the darling of the AI ​​revolution, I see its presence in the public sector as a real hidden gem.

Below, I’ll discuss Palantir’s recent victory in the defense space and explain why I see this particular transaction as such an important catalyst for the company’s long-term growth narrative.

Seizing the day

The National Geospatial-Intelligence Agency (NGA) is a security entity within the Department of Defense (DOD). NGA’s primary responsibilities include leading Project Maven, one of the military’s leading efforts in artificial intelligence, machine learning and cloud computing infrastructure.

AlphabetGoogle was a core member of Project Maven back in 2018. However, some employees disagreed with Google’s involvement – particularly as it related to the military’s research into autonomous defense systems and how they could be used in combat.

After Google decided not to renew its contract with Maven in 2019, Palantir stepped in and took over the driver’s seat.

Image source: Getty Images.

Huge victory for Palantir

Like any company, DOD strives to seamlessly integrate and connect information across its enterprise. This initiative is called the Combined Joint All-Domain Command and Control (CJADC2) protocol and is included with Project Maven.

Since Palantir’s involvement with Project Maven and CJADC2, it has achieved several notable wins.

In May, the US Office of Digital and Artificial Intelligence awarded Palantir a five-year contract worth up to $480 million. Under the terms of the agreement, Palantir software will be an important component of the CJADC2 initiative as it expands the Department of Defense’s data science capabilities to include artificial intelligence and machine learning.

In addition to the above transaction, Palantir also received a $33 million contract to deploy additional vendors to Palantir’s existing infrastructure across the Department of Defense.

Recently, the Army Research Laboratory (ARL) awarded Palantir a five-year contract worth up to $100 million. According to a press release, Palantir will help expand “access to the Maven intelligent system across all military services, including the Army, Air Force, Space Force, Navy and U.S. Marine Corps.”

Don’t underestimate Palantir’s government interests

Since replacing Google in 2019, Palantir has won several contracts under its Project Maven initiative. The obvious benefit is that these deals are worth up to several hundred million dollars and can therefore be a lucrative source of revenue for Palantir.

A less obvious idea, however, is that AI should become a more important cornerstone of defense capabilities over time. I think Palantir’s consistent Project Maven awards are a nod to the U.S. military and could lead to even more defense contracts in the long run.

Image source: Palantir.

From a macro perspective, Palantir’s U.S. government revenues are growing at a healthy rate – thanks in large part to Department of Defense contracts. The company’s latest $100 million deal with Maven and new defense partnership with Microsoft these are just two catalysts that should usher in even greater penetration of Palantir into the public sector.

In my opinion, Palantir’s public sector business is widely overlooked and not fully factored into long-term valuation opportunities. I’m optimistic that Project Maven will continue to be a source of growth for Palantir over time, and that the company’s influence in the broader defense sector will be a tailwind that investors should not ignore.

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Suzanne Frey, an Alphabet executive, is a member of The Motley Fool’s board of directors. Adam Spatacco holds positions at Alphabet, Microsoft and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Palantir Technologies. The Motley Fool recommends the following options: long $395 calls to Microsoft in January 2026 and short $405 calls to Microsoft in January 2026. The Motley Fool has a disclosure policy.