Government contracts

Palantir’s stock has surged over 1700% since its 2020 direct listing, transforming it into a tech powerhouse with a market cap exceeding $432 billion. Fueled by government contracts and its AI platform (AIP), revenue and customer base have grown dramatically. Despite ethical concerns and high valuation multiples that have drawn criticism, CEO Alex Karp remains optimistic, projecting Palantir to be a pivotal software company. AIP drives commercial expansion, attracting clients like Wendy’s and American Airlines, while its AI capabilities are increasingly adopted by the government.

Salesforce CEO Marc Benioff expressed admiration for Palantir’s growth and high revenue multiple, acknowledging its premium pricing strategy. He hinted at a possible re-evaluation of Salesforce’s pricing models. Competition between the two companies extends to government contracts. Palantir focuses on value creation, justifying its higher price points with customized data solutions, while Salesforce emphasizes competitive pricing. Palantir’s market capitalization is now at $406 billion, surpassing Salesforce’s $231 billion, despite Salesforce reporting significantly higher revenue. Salesforce shares are down 27% this year.

Microsoft secured a deal with the U.S. GSA, promising $3.1 billion in savings on cloud services for federal agencies. This aligns with the “OneGov” initiative, aimed at reducing government costs. The deal covers Office, Azure, Dynamics 365, and Sentinel, and includes free Copilot access for some users. GSA Commissioner Josh Gruenbaum cited seamless price switching and Microsoft’s desire to partner on AI adoption and gain market share from rivals like Amazon and Google. This agreement highlights Microsoft’s crucial role as a technology partner for the U.S. government.