There are several headlines that are taking a backseat to more pressing geopolitical concerns. However, the announcement that Palantir Technologies (NASDAQ:) and NVIDIA (NASDAQ:) are teaming up to launch a sovereign artificial intelligence (AI) OS reference architecture needs more attention.
This partnership will deliver customers a pre-packaged, turnkey AI system. NVIDIA will provide the hardware, and Palantir will provide the software that enables customers to deploy and secure a production-ready AI infrastructure at scale.
The “so what” moment for those who aren’t technically inclined is the words “Sovereign AI.” A primary concern of governments and municipalities, the military, and large enterprise customers is the ability to have total control of their data, AI models, and applications (i.e., the AI stack).
In many cases today, that requires sending data to a third-party cloud service, such as Amazon Web Services, Google Cloud or Azure. That means, theoretically, the data could be breached. This system removes that concern because the organizations fully own and control the entire architecture.
What This Deal Means for Palantir
Palantir continues to have naysayers, and this announcement won’t do much to silence them. However, it’s important to note that one concern about Palantir is that it’s “too dependent” on government revenue.
For context, about 55% of Palantir’s revenue comes from its public sector customers. But these contracts tend to have three attributes that investors love. They’re large in dollar value; they span multiple years, and they tend to be sticky. That means once Palantir is in place, the cost of switching becomes prohibitive.
This partnership will enhance those attributes with the U.S. government, for which Palantir is becoming a de facto operating system. Plus, it may expand its reach into international governments, an area where critics have noted the firm doesn’t have a strong presence.
AIPCon 9: Let the Customers Provide the Proof
Palantir’s AIPCon has become a showcase event for the company’s Artificial Intelligence Platform (AIP). The event that took place in mid-March continued that pattern with real customers talking about the real-world results being delivered by Palantir.
This session’s lineup was a who’s who that reinforced how Palantir continues to expand both its government and commercial customers. For example:
- GE Aerospace (NYSE:) explained how it’s doubling down on Palantir’s agentic AI capabilities. The technology is now being used to predict equipment failures before they happen, untangle supply chain bottlenecks, and free engineers from the kind of manual spreadsheet work that slows down some of the world’s most complex manufacturing operations.
- Centrus Energy (NYSE:) is using Palantir’s platform to stitch together classified and unclassified systems as part of the effort to restart domestic nuclear enrichment in the United States. This is active infrastructure work tied directly to American energy independence and national security. That’s a tangible example of the kind of high-stakes, long-duration contracts that make Palantir a one-of-one company.
- LG CNS showcased how Palantir is pushing deeper into large-scale enterprise adoption, a segment that has been one of the fastest-growing parts of the business.
That’s the thread that investors need to remember. Critics say Palantir is too reliant on government revenue. But events such as AIPCon provide real-world proof that Palantir is growing both sides of its business, both in revenue and the number of customers.
The takeaway for investors is that Palantir isn’t selling a vision for sometime down the road. It’s building a track record that’s built on long-term contractual partnerships with customers that have deeply integrated Palantir’s software into their mission-critical workflows. And once customers realize those benefits, it makes it unlikely they will move away from the Palantir platforms.
PLTR Stock Remains a Solid Long-Term Buy
Palantir stock is up nearly 500% in the last five years. No matter how much institutional investors would like to claim, that isn’t just because of retail investor enthusiasm. The company continues to prove it’s still got a lot left in the tank for future growth.
But some investors can’t get past the valuation. That’s understandable, and absolutely a personal choice investors must make for themselves. As a trade, it’s been better to be defensive about PLTR stock in the last six months. Many Palantir bears would say that, as with many technology stocks, the long-term growth from this partnership is already priced into the stock.
However, for long-term investors, the dip near $130 was an obvious buy, and if the stock heads back there again, it’s another obvious buy.
The deal with NVIDIA provides more than enough reason to believe that Palantir is expanding its moat. That means, regardless of its current valuation, PLTR stock can go much higher in the next three to five years.
