Palantir (PLTR) is probably the first name that pops up when investors think of defense-grade AI.
It’s the kind of software that generals and ministers rely on when seconds matter and a lack of clarity isn’t an option.
CEO Alex Karp has leaned all the way in. “Palantir is on fire,” he told Yahoo Finance earlier this year, positioning the business as one that’s leveraging AI in real-world missions.
The stock market is clearly loving it. Shares have surged triple digits this year, lifted by growing conviction in Palantir’s unique AI advantage and its growing role in public-sector workflows.
AI is critical in the global arms race and has become central to the company’s pitch. Layer that onto Palantir’s massive government book of business, and it feels more like an infrastructure player than a contractor.
That’s exactly why this latest move has caught the investor’s eye.
In a remarkably uncharacteristic move, Palantir just walked away from a major government identity deal, leaving billions on the table due to concerns about a democratic mandate and data control.
Palantir pushes back on the UK’s digital identity plan
Palantir isn’t biting with its latest bombshell move.
According to reporting from The Times, the AI giant won’t be participating in the UK government’s new digital identity program. UK head Louis Mosley called the proposal “undemocratic,” flagging security concerns.
He questioned the necessity of the move and said that existing IDs in passports and tax IDs are already getting the job done. Palantir says it’s not bidding on any related contracts.
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The plan would make digital ID mandatory for employment checks, while storing personal credentials in a smartphone-based wallet. Ministers are looking to push it quickly, but public support has been eroding fast, as recent polls show it falling from 53% to 31%, while 45% now oppose the policy outright.
Nevertheless, the numbers would have been massive for Palantir if the deal had gone through.
Procurement estimates run between £1.2 billion and £2 billion across integration, verification, and cloud services. The UK government has already announced AI spending to be at an eye-catching £14 billion annually, attracting heavy hitters.
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For investors, though, the development is huge.
It indicates that Palantir won’t chase every revenue opportunity, especially one that opens the door for massive regulatory, legal, and reputational blowback.
It’s worth noting that the company is already established in less controversial areas, such as the £330 million NHS Federated Data Platform.
Quick takeaways
- Palantir won’t be bidding on the digital ID program, due to mandates and security concerns.
- The policy makes digital ID mandatory for right-to-work checks, and public support for the move has declined sharply.
- Contract opportunities are pegged at £1.2 billion to £2 billion, attracting major integrators.
- Palantir focuses on lower-risk UK projects, such as the £330 million NHS data platform.
Image source: TheStreet
Palantir’s government engine is still running hot
Palantir’s government book is surging, despite the falling out in the UK digital ID saga.
For instance, in Q2 2025, total sales skyrocketed to $1 billion, up 48% year over year, and government revenue shot up 49% to $553 million. U.S. government revenue in particular was up 53% to $426 million.
Zoom out, and the mix is incredibly durable.
For full-year 2024, Palantir generated $2.87 billion in revenue, with 55% from government customers. Moreover, U.S. revenue grew 52% year over year in Q4 2024, which set the stage for its superb 2025 guidance at roughly $4.1 to $4.2 billion.
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Going back to 2019, Palantir’s commercial business was gaining speed, edging past its government segment with a superb $397 million in sales compared to $345.5 million.
By 2020, the tables had turned, with government sales surging to $610.2 million compared with $482.5 million on the commercial side. That gap only grew through 2022, when the government segment reached $1.1 billion, compared to $834.4 million in commercial contracts.
Further, it’s important to note that Palantir’s pipeline is anchored by multi-year defense and health platforms.
The U.S. Army Enterprise Service Agreement is valued at up to a whopping $10 billion over 10 years, which basically consolidated multiple software buys into one vehicle. Executives have also flagged momentum in national security work that is now scaling incredibly quickly with AI.
Palantir’s biggest government deals in the last 24 months:
- U.S. Army ESA: Up to $10 billion over 10 years, enterprise software and data platform.
- Maven Smart System: $795 million contract ceiling following a 2025 modification; initial 2024 award was at $480 million.
- TITAN prototypes: $178.4 million for 10 next-gen deep-sensing ground stations.
- NHS Federated Data Platform: £330 million over seven years for England-wide data platform.
