Prediction: Palantir's New Deal With NATO Could Revolutionize How Artificial Intelligence (AI) Is Used in the Public Sector. Here's Why.

Adam Spatacco, The Motley Fool

Sun, Apr 27, 2025, 9:00 AM 5 min read

The technology sector has gotten off to a rough start this year. According to data from Yahoo! Finance, the tech sector has declined by 13.6% in 2025 (as of April 24). Underneath the broader technology umbrella, the software infrastructure subsector has dropped by roughly 10% on the year.

One software stock that has demonstrated some resiliency compared its peers is data analytics platform Palantir Technologies (NASDAQ: PLTR). As of this writing, shares of Palantir have gained 33% this year -- making it the best performer among Nasdaq-100 stocks.

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One of the catalysts fueling enthusiasm for Palantir is the company's consistent demonstration showing how its artificial intelligence (AI) software applications are used by large enterprises. A few weeks ago, Palantir struck a partnership with the North Atlantic Treaty Organization (NATO). Unsurprisingly, shares experienced a brief jump on this news.

Below, I'm going to break down why this deal with NATO could be a game changer for how AI is deployed in the public sector. More importantly, I'll make the case for why Palantir sits in a unique position to take advantage of the public sector's interest in AI and how the company appears to be supercharged for even more growth.

Palantir's AI applications are sold across the public and private sectors. On the commercial side of the house, large corporations use Palantir to help them organize data across disparate systems and synthesize these workloads into actionable insights. On the government side, Palantir helps the Department of Defense (DOD) on different military and stealth operations.

Per the company's annual filing, Palantir bifurcates its revenue into two categories: government and commercial. In 2024, roughly 55% of Palantir's total revenue stemmed from the government. Taking this one step further, Palantir's 2024 revenue was split into the following geographic demographics: 66% for the U.S., 11% for the United Kingdom, and 23% for the rest of the world.

Given the data above, it's clear that Palantir relies on the public sector for much of its deal flow. In addition, the company's heavy concentration in the U.S. signals that Palantir's presence overseas is still in early stages.

If you aren't familiar with NATO, the organization represents an alliance comprising 32 members -- 30 European countries, Canada, and the U.S. In essence, NATO is a coalition of different nations that have agreed to defend one another militarily.