Federal dollars and AI: Palantir's (PLTR) recession-proof formula

It’s often said that government employees are insulated from recessions. The same could be said for defense contractors thriving on a steady stream of federal dollars.

Take Palantir Technologies (PLTR), a data analytics giant with deep ties to Washington. While not directly subsidized, Palantir earned more than half its revenue from the U.S. government as of December 2024.

Since 2009, the company has secured nearly $2.5 billion in federal contracts, including $1.3 billion from the Department of Defense, according to USASpending.gov.

In 2024 alone, Palantir landed $531 million in federal contracts, its biggest haul yet.

This robust pipeline helped the data giant rake in a record $462.2 million profit on $2.87 billion in revenue last year.

Palantir is no stranger to Washington politics, and its deep ties to the powers that be are the result of a long, deliberate strategy.

Ahead of Trump’s return to the White House, the company brought on lobbying firm Miller Strategies with close ties to the president’s business network.

As The Hill reported, the firm also employs George Caram, a former National Security Council official under Trump’s first term.

With those connections in place, analysts estimate Palantir’s U.S. government contract revenue could jump 40% to $358 million in Q1, with international government deals topping $100 million.

All of this growth comes as the broader market struggles to stay afloat in the face of the trade war uncertainty.

Federal dollars and AI: PLTR recession-proof formula

Since bottoming on April 4, Palantir’s stock has surged 68% and is now hovering around all-time highs.

Last week alone, shares of Palantir rose more than 10% and currently trade just below $125, which is within striking distance of the company’s record close of $124.62 on February 18.

Palantir’s rally stands in sharp contrast to the broader market.

The S&P 500 is down more than 3% this year, while the S&P 500 Information Technology Index has fallen over 8% over the same period.

But it’s not just federal dollars propping up the stock. Palantir has also leaned hard into AI, with its machine learning tools now used by government agencies, big corporations, and giant financial firms.

It’s that dual focus on defense and AI that continues to make Palantir a top pick for analysts, even as the Trump administration signals plans to rein in spending.

“We are not worried that Palantir will be on the dark side of [...] budget cuts,” said Wedbush analyst Dan Ives.

“Palantir is well-positioned for this new disciplined spending environment at the Pentagon, and this will ultimately be a positive growth catalyst as PLTR gets a bigger seat at the table.”