Defense contracts have been so central to Palantir’s (PLTR) meteoric growth story that the software firm has been called “the AI arms dealer of the 21st century” by one national security expert.
But in this politically charged and highly divisive era in the US, Palantir’s close ties to the defense sector — and co-founder Peter Thiel’s close ties to President Trump — can also create risks for the company’s brand. Palantir had reportedly landed more $113 million in government contracts within five months of Trump taking office.
“Palantir’s surveillance capabilities have really been a source of controversy since its founding,” Beth Williamson, head of sustainable equity research at Calamos Investments, told Morningstar this past summer.
But in its latest initiative, the company is putting its defense work on pause as it turns toward the commercial sector.
Data cloud company Snowflake (SNOW) announced on Thursday that it was partnering with Palantir to provide customers with enhanced enterprise-ready AI and analytics solutions.
Snowflake’s AI Data Cloud platform will be integrated with the Palantir Foundry and Palantir Artificial Intelligence Intelligence Platform (AIP) to deliver data analytics, data pipelines and AI applications for users in the commercial and public sectors.
Snowflake noted in a press release that Eaton, a global intelligent power management company, has already leveraged the solutions developed through the partnership in order to build out a data foundation that’s supported by AI work flows.
The integration of the two platforms allows companies like Eaton to deploy AI agents efficiently and can lower costs, according to Snowflake.
“Discoverability, accessibility, and usability are key to unlocking the value of our data assets for the business,” Ross Schalmo, chief data officer at Eaton, said in a statement. “With a native integration between Snowflake and Palantir, two of our strategic technology partners, we eliminate tedious data movement tasks allowing us to focus on delivering outcomes ranging from agentic configuration, pricing and quoting to digital twins on our shop floor and improved servicing of our products in the field.”
Palantir goes commercial as defense work scrutinized
Snowflake has been aggressive in pushing deeper into AI, partnering with Anthropic earlier this year to integrate its Claude large language model.
That adds to its early advantage in commercializing a cloud-agnostic data lakehouse, a feature that’s proved key as more enterprises adopt multicloud strategies.
As for Palantir, the company reported in its Q2 earnings in August that government contracts account for 55% of its overall revenue. However, the company also noted that its commercial revenue grew 93% year-over-year and 20% quarter-over-quarter to $306 million.
The ramping up of its commercial business comes at an interesting moment for Palantir: Earlier this month, a leaked internal U.S. Army memo described the work it is doing to modernize the military’s communications — in collaboration with Anduril — had significant "fundamental security" issues.
"We cannot control who sees what, we cannot see what users are doing, and we cannot verify that the software itself is secure," the memo stated.
A Palantir spokesperson insisted that “no vulnerabilities were found in the Palantir platform,” while Anduril said in a statement to Reuters that the “recent report reflects an outdated snapshot, not the current state of the program.”
Palantir’s stock fell 7.5% on news of the memo. However, it has soared 135.5% for the year.
Snowflake’s shares stayed mostly flat on Thursday, but they have gained 55.5% YTD.
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