Palantir’s Pentagon Progress and London Setback: Mixed Signals for AI in Government

Palantir’s core business accelerates with 85% revenue growth, but shares fall 18% YTD amid London police contract block, insider sales, and a Pentagon program milestone.

Palantir Technologies finds itself in an unusual spot: its core business is accelerating at a pace few software companies can match, yet the share price has been sliding all year. After losing around 18% since January, the stock closed Friday at €117.96 – more than a third below its early-November 2025 peak of €179.86. The Relative Strength Index of 70.5 even hints at short-term overbought conditions, a curious state for a stock that has been in decline.

The tension between operational strength and market scepticism goes beyond valuation multiples. Insider sales totalling $297 million over the past three months are an extra factor for investors to weigh.

London’s Block on a £50 Million Deal

A concrete example of the regulatory headwinds Palantir faces came from across the Atlantic. The Mayor of London’s office for policing and crime, MOPAC, blocked a contract worth roughly £50 million between the Metropolitan Police and the data analytics firm. The deal, split into £25.3 million for fiscal 2026/27 and an optional £24.8 million extension, would have been Palantir’s largest police contract in Britain. MOPAC’s objection centred on the lack of a competitive tender process and insufficient value-for-money evidence.

Palantir publicly disputed the decision, and MOPAC left the door open for a revised procurement. Yet the episode underscores a growing risk for all public-sector AI contracts: procurement authorities are increasingly demanding competitive bidding, robust cost-benefit analysis and clear data-privacy safeguards. Even strong operational performance can be derailed by a single political intervention.

Meanwhile, the Pentagon Races Ahead

On the US defence side, Palantir’s position keeps strengthening. The Maven Smart System – an AI platform that fuses military data streams into a single interface – is on track to be officially designated a Pentagon programme by the end of fiscal 2026. A memorandum from Deputy Defence Secretary Steve Feinberg dated March 9 lays out the timeline. Once Maven attains programme status, it will receive multi-year funding and be mandated across all armed services, with the US Army taking over contracting. That follows a potential $10 billion framework agreement Palantir signed with the Army in July 2025.

A lingering complication involves Anthropic’s Claude model, which is integrated into Maven. In early March 2026, the Pentagon labelled Anthropic a supply-chain risk. Defence Secretary Pete Hegseth ordered a phased replacement of Anthropic tools over six months – though with exceptions where the tools are deemed mission-critical. The transition could create short-term friction, but the long-term programme status vastly outweighs that risk in importance.

Growth Figures That Defy the Stock’s Slide

Palantir’s first-quarter results justify the bullish case. Revenue surged 85% year-on-year, with the US more than doubling, up 104%. The company’s net revenue retention hit 150%, meaning existing customers are spending 50% more than a year earlier, and the number of US commercial clients rose 42%. International revenue grew only 26%, a reminder of the geographic imbalance.

For the second quarter, management expects revenue between $1.797 billion and $1.801 billion. The full-year outlook was raised to $7.650-$7.662 billion, implying 71% growth. US commercial revenue alone is seen climbing at least 120%. Analysts forecast Q2 earnings per share of $0.33, and the remaining backlog of $4.45 billion provides significant visibility.

What Lies Ahead – Macro and Micro

The next catalyst is likely the Q2 report, due to answer whether Palantir can beat its own elevated guidance. Before that, macro data will test the thesis. The Bureau of Economic Analysis publishes its second reading of first-quarter GDP on May 28, alongside April personal income and spending numbers and the PCE inflation gauge. High-multiple growth stocks are especially sensitive to shifts in rate expectations.

The US markets are closed Monday for Memorial Day, so trading resumes Tuesday. Palantir’s virtual shareholder meeting on June 3 will also draw attention. Until then, the stock sits roughly 15% below its 200-day moving average – a technical level that often signals either a coming bounce or further decline, depending on who is buying.