Palantir Technologies shares fell sharply Friday on a report that a prototype battlefield communications network being developed by the software maker and Anduril Industries has security problems. With Friday's retreat, Palantir stock has still gained over 128% in 2025.
The prototype battlefield communications network is rife with "fundamental security" problems and vulnerabilities, and should be treated as a "very high risk," according to a recent internal Army memo, said a Reuters report.
On Friday, Palantir tumbled 7.5% to close at 173.07, knifing through the 21-day moving average. Palantir stock cleared a 185.75 cup-with-handle buy point on Thursday. But Friday's move triggered the 7%-8% sell rule for investors who bought that breakout.
Key Defense Contracts
In July, the Army awarded Anduril a $99.6 million contract with partners that include Palantir to develop the next phase of the Army's Next-Generation Command and Control (NGC2) platform prototype. Other Anduril partners include Striveworks, Govini, Instant Connect Enterprise, Research Innovations and Microsoft.
Meanwhile, Lockheed Martin in early September received a $26 million contract to develop a NGC2 prototype architecture. The Army is expected to approve more prototype projects.
One view is that NGC2 could serve as a foundational piece for a larger, integrated Space Dome data network. The "Golden Dome" air and missile defense shield is expected to cost $175 billion or more.
Further, Anduril is viewed as a new challenger to defense industry incumbents. The company was founded in 2017. In an interview with the Information, Anduril Chief Executive Brian Schimpf said the company expects to double revenue in 2025.
Also, Anduril has been developing pilotless fighter jets and other autonomous systems. It was founded by former Facebook executive Palmer Luckey and three former Palantir executives. Further, Elon Musk's SpaceX, Anduril and Palantir are collaborating on a satellite-based defense system proposal, according to reports.
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Palantir Stock Technical Ratings
Palantir shares have pulled back from an all-time high of 190 on Aug. 12.
Palantir stock has boomed amid views that the company seems poised to win more U.S. government business during the Trump administration. Also, retail investor enthusiasm for generative artificial intelligence plays has lifted Palantir stock, although commercial-related revenue has yet to ramp up.
