Palantir’s Major Defense Contract Faces Scrutiny Amid European Concerns

Palantir Technologies Inc. finds itself navigating a complex landscape where significant commercial achievements are met with growing political headwinds. The data analytics firm recently secured a substantial military contract, yet this success is partially overshadowed by escalating skepticism in Europe regarding the use of its American-made software for sensitive government operations.

Financial Performance and Lofty Valuation Present a Contrast

A fundamental analysis of Palantir reveals a stark dichotomy. The company reported a 63 percent surge in revenue for the third quarter of 2025, reaching $1.18 billion. Its U.S. commercial customer segment experienced particularly explosive growth, advancing by 121 percent. For the full year, management anticipates revenues of approximately $4.4 billion.

These robust growth figures, however, stand in sharp relief to valuation metrics that are extraordinary even within the technology sector. The stock trades at a price-to-earnings ratio exceeding 400 and a price-to-sales ratio of about 117. With a market capitalization of $462 billion, Palantir commands a higher valuation than numerous long-established software giants. From a technical perspective, the shares are consolidating near all-time highs, with a support zone having formed between €165 and €170. Analysts note that this premium valuation could leave the stock vulnerable to corrections if business momentum falters.

U.S. Navy Deal and French Contract Extension Highlight Demand

In a major commercial win, Palantir has been awarded a contract with the U.S. Navy worth up to $448 million. The agreement involves the implementation of the company’s “ShipOS” system, which is built upon its core “Foundry” and “Artificial Intelligence Platform” (AIP) infrastructures. The project aims to modernize fleet operations through AI-powered data analytics.

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Concurrently, the company has successfully extended its partnership with France’s domestic intelligence agency, the DGSI, for an additional three years. This renewal occurred despite ongoing debates in Europe about the processing of regional security data by U.S. technology providers. The decision signals that, in this instance, operational requirements have temporarily outweighed political reservations.

Political Scrutiny Intensifies in the United Kingdom

Across the English Channel, however, Palantir’s government collaborations are facing increased pressure. Members of the UK Parliament are critically examining existing contracts following a Swiss investigation that highlighted potential security vulnerabilities associated with the software. The report specifically raised concerns that sensitive data could potentially become accessible to U.S. authorities.

This scrutiny comes after the UK Ministry of Defence engaged Palantir for military AI projects valued between £75 million and £750 million. The current debate focuses less on overarching data privacy principles—the EU has confirmed data adequacy for the UK until 2031—and more on the specific implications of integrating American technology into sovereign national security infrastructure.

The coming weeks will determine whether these political debates translate into tangible business consequences, such as contract cancellations, or whether they will subside without material impact, as appears to be the case in France.