My enthusiasm for Palantir (PLTR) has recently been refreshed, as more information about its role in the U.S. Golden Dome—an ambitious missile-defense technology pioneered by President Donald Trump—becomes public. Along with Elon Musk’s SpaceX and a new AI defense firm called Anduril Industries, Palantir is prepared to help transform America’s traditional defense model into an AI-based modern warfare arsenal.
Palantir Technologies (PLTR) vs. SPDR S&P 500 ETF (SPY)
If successful with projects like the Golden Dome, Palantir will not only revolutionize the defense sector but potentially radically change the perception of AI in national security, which makes PLTR stock an exciting long-term investment for fearless, growth-oriented investors.
America’s Next-Generation Missile Shield
The Golden Dome will be the most advanced and complete missile defense system in history. Based on a concept similar to the Israeli Iron Dome, it can intercept advanced missile attacks, including hypersonic missiles and intercontinental ballistic missiles (ICBMs), with high precision.
Initial funding is pegged at $25 billion, currently being processed through Congress. However, that’s part of a larger plan, based on $175 billion over 10 years. If funding proceeds, the Golden Dome will rely on a sophisticated satellite network of 400 to 1,000 satellites provided by SpaceX, combined with autonomous drones and sensors from Anduril.
Conceptualized 3D rendering of the U.S. Golden Dome, aimed at safeguarding Americans from foreign threats.
Palantir’s involvement in this initiative is particularly noteworthy. Its Gotham platform will function as the central digital infrastructure powering the Golden Dome, integrating satellite and sensor data from multiple technology partners to enable rapid analysis and real-time decision-making.
The Department of Defense has emphasized the importance of seamless data integration—a capability in which Palantir has a proven track record, notably through its work on the Army’s Maven AI project. By effectively consolidating diverse and sensitive data streams, Palantir has positioned itself well ahead of traditional defense contractors. In short, Palantir is a disruptive force, often a hallmark of companies with strong long-term return potential.
Revenue Catalysts Line Up for PLTR
The financial implications of even a minor share in a program of this size are massive. If Palantir can gain just 1-5% of the proposed $175 billion program, that’s between $1.75 billion and $8.75 billion in revenue creation. Considering Palantir’s current FY2025 revenue guidance of around $3.9 billion, the potential contribution from the Golden Dome could be priceless.
Palantir Technologies (PLTR) Revenue by Segment
Moreover, the subscription-based model proposed by the Golden Dome contractors represents a significant shift from the traditional defense procurement approach to a recurring revenue structure. This transition supports higher margins over time through long-term software reuse. It’s an innovative and economically sound strategy that aligns defense spending with the modern threats’ evolving and fast-paced nature.
While some Pentagon officials have voiced concerns about potential long-term vendor lock-in, Palantir’s model’s operational efficiencies and enhanced capabilities present a compelling case. Additionally, the model contributes to long-term revenue stability for contractors, which can have broader positive implications for the U.S. macroeconomy.
Lack of Cooling for Palantir’s Hot Valuation
Many find the current equity valuations of Palantir excessive. The stock is now trading at ~200x forward earnings. For the record, traditional defense stocks are much cheaper at 15 to 20x forward earnings, while newer, ultra-growth software firms are commonly between 50 and 100x earnings.
While the company is expensive based on traditional metrics, Palantir’s impressive growth in both Government and Commercial segments, especially its GAAP profitability as of Q3 2023, is a reasonable justification for that premium. If Palantir executes on the Golden Dome successfully, then the company could potentially grow into its present valuation very quickly.
However, investing in Palantir often carries a level of harsh volatility. One of the key near-term catalysts will be whether Congress signs off on the first $25 billion tranche, and assuming the answer is yes, there could be positive momentum from that. But if the funding is delayed—or worse, disrupted—that will probably create a modest sentiment roadblock.
Is Palantir Technologies a Buy, Hold, or Sell?
Palantir has a consensus Hold rating on Wall Street based on three Buys, eleven Holds, and four Sells. The average PLTR price target is $100.13, indicating a circa 19% downside over the next 12 months.
However, I consider this overly pessimistic and undervalues the strong sentiment and long-term macro tailwinds Palantir engenders. Some caution is warranted, which is why I have positioned the stock at about 2% in my portfolio, but upside remains both likely and secure.
Looking well into the future, Palantir’s vision echoes that of early platform pioneers like Salesforce (CRM), which became indispensable to business operations. By 2030, I anticipate Palantir evolving into an essential AI utility for the U.S. government and allied defense networks, much like electricity is today.
The Golden Dome initiative represents a critical milestone in realizing this vision. Should the Golden Dome missile defense platform set the standard for future international AI defense systems, Palantir is poised to become the default provider. Even competitors will likely depend on some component of Palantir’s technology.
Overall, Palantir represents a unique investment opportunity at the intersection of expansive AI growth, robust government support, and recurring defense-sector revenues. The Golden Dome project marks a transformative shift in defense contracting, lending significant credibility to Palantir’s long-term prospects. While the current valuation appears high, the macro-driven upside potential positions Palantir as a compelling candidate for a long-term investment combining defense and AI. I remain strongly bullish, actively buying on dips and fully committed to the Western-alliance defense-AI thesis that Palantir is at the forefront of.
