The U.S. Army late Thursday announced a revised agreement with Palantir Technologies potentially involving up to $10 billion in software purchases over 10 years. But Palantir stock dipped on Friday as equities sold off on new Trump administration tariff news and analysts mulled whatever upside there could be for Palantir from the revised U.S. Army deal.
The U.S. Army said it was consolidating dozens of contracts into a single agreement with Palantir. The new agreement includes volume-based discounts. The agreement does not commit the Army to any new purchases.
In a news release, the Army said: "Through this enterprise agreement, the Army consolidates 75 contracts, comprised of 15 prime contracts and 60 related contracts, into a single contract, accelerating the delivery of proven commercial software to warfighters while removing contract and reseller pass-through fees. This streamlined approach reduces procurement timelines, ensuring soldiers have rapid access to cutting-edge data integration, analytics, and artificial intelligence tools."
Upside for Palantir Stock?
Any net revenue gain for Palantir stock was unclear.
At William Blair, analyst Louie DiPalma said in a report: "Yesterday, the U.S. Army announced that it consolidated Palantir's contracts into a $10 billion/10-year enterprise agreement, with the agreement 'establishing volume based discounts.' However, we view the lack of any quantification of these discounts as reflective of how discounts are likely significantly lower than others that have been announced. These
discounts will likely be offset by higher volumes."
He said the General Services Administration is pursuing large discounts from many of the software vendors, including DocuSign and Salesforce.
"Palantir currently generates approximately $400 million in annual recurring revenue from the Army across contracts that include Vantage, Titan, Maven Smart System (and others). With the addition of the recent NGC2 win and an anticipated expansion of Titan to the production phase, Palantir's U.S. Army ARR run-rate will likely grow to $600 million over the next two years. Based on our government tracker, Palantir was awarded $135 million in ARR across 9 different government contracts for the second quarter, a major increase from $27 million in ARR in last year's second quarter."
On the stock market today, Palantir stock fell 2.4% to 154.55 in afternoon trading.
Wedbush Analyst Expects Upside
Wedbush analyst Daniel Ives, though, was upbeat in a report.
"This contract represents one of the largest ever DOD (Department of Defense) software contracts in U.S. history with the Army looking to purchase goods and services as needed while seeing significant cost efficiencies across mission-critical programs," Ives said.
He added: "We believe this deal represents an additional tailwind for PLTR with artificial intelligence initiatives across the U.S. government accelerating. We expect to hear more about this deal along with strong AI driven results when the company reports earnings on Monday after the bell."
In a follow-up email to IBD, Ives said: "Not a commitment but gives Palantir huge bite at the apple."
Palantir reports second quarter earnings after the market close on Aug. 4.
Second Quarter Earnings Estimates
On Thursday, Palantir stock hit a new all-time high of 160.89 in intraday trading but shares then pulled back.
With shares up about 109% in 2025, expectations will be high heading into the earnings report. Palantir is the top performer on the S&P 500 in 2025, after leading the benchmark index last year. Wall Street analysts project 54% profit growth to 14 cents with revenue rising 38% to $939.3 million.
In addition, analysts expect Palantir's government business to grow 38% to $513 million. The commercial business is also expected to grow 38%, but to $425 million. Wall Street will be looking for management commentary on federal spending and the "Golden Dome" space defense project.
Palantir has provided data analytics tools to government customers for intelligence gathering, counterterrorism and military purposes. Now Palantir aims to use generative AI to spur growth in the U.S. commercial market, such as health care and financial services.
Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
