The deal is a reflection of Palantir’s close ties developed with the Defense Department.

Palantir Technologies Inc. (NYSE: PLTR) has secured a significant contract worth $250 million with the US Defense Department. The primary focus of this contract is the research and development of artificial intelligence (AI) and machine learning technology. This development underscores Palantir’s strong ties to the US government and its growing involvement in the realm of AI and defense.

The announcement of this three-year deal resulted in a 6% jump in Palantir’s shares, highlighting investor confidence in the company’s AI initiatives. This contract builds upon Palantir’s prior work with the Army Research Lab, dating back to at least 2018. While the contract mentions “research and development services” in AI and machine learning, specific details regarding the scope of the contract remain undisclosed. (Yahoo Finance)

Palantir’s journey is noteworthy. Founded by Peter Thiel in the aftermath of the 9/11 attacks, the company initially faced challenges in selling its software and services to the government. It even resorted to legal action against the US Army to secure government contracts. However, over time, Palantir has become one of the few Silicon Valley startups with strong ties to the Defense Department.

Analysts, like Louie DiPalma from William Blair, predict that while this deal may not significantly impact Palantir’s profits due to lower margins associated with service contracts compared to software deals, it reflects the company’s close relationship with the US government.

This factor is seen as a positive sign for Palantir’s revenue growth in the fourth quarter of 2023 and beyond.

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