Palantir Technologies (PLTR) strong run in 2023 is running into more headwinds with a bearish analyst on PLTR stock raising questions over an Army contract renewal.
William Blair analyst Louie DiPalma, who rates PLTR stock underperform, published a note published Friday speculating on the future of a four-year, $458 million Army contract which is set to expire. Citing a U.S. Army presentation last week, DiPalma wrote that there is "strong indication that Palantir's renewal contract in two weeks will be significantly less than the original $458 million."
He also said the Army might offer a new two-year renewal for $116 million with Palantir's revenue reduced by additional vendors sharing in the deal.
The William Blair analyst speculated that data ownership could be an issue between the Army and Palantir. Palantir aims to use customer data to train artificial intelligence models.
PLTR Stock: Government Agencies Biggest Customers
PLTR stock edged up Friday after DiPalma released the note. On the stock market today, Palantir stock fell 9.2% to close at 18.40 as other software stocks also pulled back after big gains in November. The Nasdaq composite fell 0.8% on Monday.
Barron's published an article today saying the William Blair note could take the wind out of PLTR stock.
Palantir garners nearly 60% of revenue from government agencies. They use Palantir data analytics software for intelligence gathering, counterterrorism and military purposes.
PLTR stock hit a 52-week intraday high on Nov. 21. But Palantir stock reversed after the size of a highly anticipated United Kingdom contract disappointed.
Bulls and bears on PLTR stock have clashed over Palantir's progress in monetizing new "generative" AI products.
With Monday's retreat, PLTR stock is still up 190% in 2023.
In addition, the software maker has expanded into the health care, energy and manufacturing sectors.
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