When OpenAI and Anthropic step in to "compete for business," Palantir's real rivals have arrived.
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Palantir is standing at a delicate crossroads: it has completed a transformation on the wave of AI, but may also be overwhelmed by the very same wave.
As reported by WallstreetCN, after the US markets closed on Monday, the 4th (Eastern Time), Palantir released an impressive report, with both revenue and profit hitting historic highs, and US market sales more than doubling year-on-year.
However, the company’s share price has fallen nearly 20% this year, diverging sharply from its fundamentals. Wall Street is betting that as large AI labs like OpenAI and Anthropic accelerate their expansion, the appeal of Palantir’s core software products to clients could gradually be eroded.
According to The Wall Street Journal citing insiders, OpenAI is building a data connection and structuring platform, whose functions are considered direct competition to Palantir, and the team includes quite a few former Palantir employees.
OpenAI and Anthropic have both copied Palantir’s signature “forward deployed engineer” model, embedding engineers in client teams to promote AI adoption.
William Blair analyst Louie DiPalma stated bluntly in his latest report:
The competitive landscape between Anthropic, OpenAI, and Palantir is intensifying.
AI is both engine and risk
Palantir’s business model is built on data integration and analysis.
Palantir helps government agencies and enterprise clients extract insights from vast information streams, supporting scenarios like supply chain planning and military strike decision-making. The company only achieved profitability for the first time in 2023, over twenty years after its founding.
The rise of AI opened a new window for Palantir: enterprise clients began using OpenAI, Anthropic, and Google’s large language models in Palantir’s data platform to process information, directly driving explosive revenue growth.
Since Palantir launched its Artificial Intelligence Platform (AIP), its share price once rose more than 2300% cumulatively.
(Palantir officially launched its AI platform in April 2023, after which its share price continued rising)
However, Palantir is essentially not an AI company. It does not develop its own models; AIP’s operational logic is to bring in third-party models to enhance its software capabilities.
As Palantir employees describe it, large language models are like crude oil, and Palantir is the refinery that turns them into usable products. But more and more people believe “crude oil” will eventually learn to refine itself.
Some experts estimate that large language models can already replicate most of Palantir’s work in large-scale data understanding. Jake Behan, Capital Markets Head at Direxion, summed up the controversy:
The debate around Palantir is not about its growth, but about whether it occupies an indispensable position in the AI tech stack, or is simply an expensive wrapper over increasingly cheap AI models.
Executives talk tough, the data tells a story
Facing external doubts, Palantir’s management displayed their usual tough stance in this week’s investor call.
Executives repeatedly referred to the outputs from large AI labs as “slop” (garbage content), using the term 17 times during the call. CEO Alex Karp said:
Enterprise clients can try all sorts of AI products on the market, but most will eventually come back to Palantir.
CTO Shyam Sankar said that cheaper open-source models actually bring more business to Palantir. He stated:
The better, cheaper, and more capable models become, the more we benefit. These labs aren’t our competitors; they're part of our supply chain.
But cracks are already appearing in the earnings data. Palantir’s US commercial contract bookings growth rate plummeted from 137% last quarter to 45%.
This gap has raised analysts’ alertness, hinting that commercial market expansion momentum is weakening, and the effects of rising competitive pressure may have begun to show.
Government moat: deep, but not boundless
On the government side, Palantir’s moat remains solid.
With its first-mover advantage in defense and deep political connections in Washington, Palantir secured over $1.1 billion in federal contracts in the first year of Trump’s second term, up 70% year-on-year.
Its command-and-control system Maven Smart System is about to obtain “official project record” status—a very precious qualification in defense contracting, representing stable long-term funding.
Yet even within the Pentagon, Palantir’s absolute dominance is subtly loosening.
According to executives at AI startups, the Pentagon is extending AI deployment from headquarters to the front lines, and lightweight models for soldiers' phones or drones are often incompatible with Palantir’s systems.
Palantir is launching a new version of Maven compatible with drones, but how far it can catch up remains an open question.
Ben Van Roo, co-founder of AI defense startup Legion Intelligence, noted that while Maven has succeeded, it only covers “a subset of thousands of DoD workflows.”
Broader battlefield scenarios—such as intelligence gathering and logistical support—will give rise to lots of AI demand outside the Palantir ecosystem. As he said:
That is the main front for the next decade.
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