Palantir Technologies Inc (NASDAQ:PLTR) has long thrived on charging a premium for its government-grade AI software. But Salesforce Inc (NYSE:CRM) just crashed the party with Missionforce, its new national security division — and CEO Marc Benioff is already boasting about beating Palantir for a U.S. Army deal. That has investors asking: is Palantir's pricing power finally under threat?
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Salesforce Sharpens Its Spear
Salesforce has traditionally been the enterprise CRM juggernaut, but with Missionforce, it's making a serious play for defense contracts. Benioff said the company "just won a huge U.S. Army contract" and boasted: "We beat Palantir." The win, coupled with an existing $100 million Enterprise License Agreement with the Army, signals Salesforce's ambitions to grab market share in government AI workflows.
For Salesforce investors, that's a glimmer of optimism after a rough year — shares are down 28% YTD as Wall Street cools on traditional software. Analysts like Citizens' Patrick Walravens see government deals as a tailwind, calling the U.S. Army contract a highlight of Salesforce's second quarter and assigning a $430 price target.
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Palantir's Pricey Fortress
Palantir, meanwhile, continues to thrive despite criticism of its high prices. In August, the State Department chose Palantir's Foundry to power its Orion program, noting it was the only vendor among 42 bidders that met machine-learning requirements. That exclusivity helps explain why Palantir commands a $406 billion market cap despite generating just a fraction of Salesforce's revenue.
But Salesforce's push poses a potential problem: if agencies start seeing Missionforce as "good enough" at lower cost, Palantir's premium could come under pressure. For now, PLTR stock is still up 125% this year, but that surge has left skeptics questioning whether the company is trading at an unsustainably high valuation.
Investor Takeaway
Palantir's moat has been its ability to command top-dollar for mission-critical AI — but Salesforce's Missionforce is angling to undercut that model. If Missionforce can prove scale and reliability, the battle for AI government dollars could get far more competitive.
For investors, that means Palantir may need to do more than just point to Foundry's exclusivity to justify its premium pricing.
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