Palantir and Nvidia Emerge as Key Players in Government AI Modernization

Back in March 2026, Palantir (PLTR) announced its sovereign AI OS Reference Architecture combining its software with Nvidia's (NVDA) hardware for secure and scalable AI deployments. More recently, however, both companies deepened their collaboration related to sovereign AI deployment. Announced on Sept. 10, the collaboration establishes an "AI stack combining Palantir sovereign AI and custom Nvidia Nemotron open models for complex supply chain operations," with the first deployment of the AI stack to be within Nvidia's own internal operations.

It's important to note that this AI stack will find applications across industries like technology, agriculture, pharmaceuticals, manufacturing, and more, as well as within governments, helping companies and organizations to optimize their supply-chain operations. Further, sovereign AI deployment positions both Nvidia and Palantir as key players participating in government AI modernization.

Headquartered in Aventura, Florida, Palantir provides software platforms and data analytics for both commercial and government customers. For fiscal 2025, Palantir reported 54% of revenue from government customers and the remaining 46% from the commercial segment. The company's four principal software platforms include Gotham, Foundry, Apollo, and the Artificial Intelligence Platform (AIP).

In the last 52 weeks, PLTR stock has traded relatively sideways on concerns related to valuation. However, after reporting its second-quarter results, PLTR stock has bounced back strongly from oversold levels.

In terms of valuation, Palantir stock currently trades at a forward price-to-earnings (P/E) ratio of 131.1 times and a price-to-sales (P/S) ratio of 89.7 times. While these valuation multiples look stretched, Palantir has been on a high growth trajectory and its cash flows have been swelling.

Palantir reported blockbuster Q2 earnings that surpassed analyst estimates on Aug. 3. Total revenue increased 93% on a year-over-year (YOY) basis to $1.935 billion. Within that, U.S. commercial revenue was a key growth driver, increasing 149% YOY to $764 million. U.S. government revenue growth was also robust, climbing 90% YOY to $809 million. At the same time, adjusted EBITDA for the quarter was $1.2 billion, implying a healthy margin of 62%. With adjusted free cash flow at $1.22 billion, Palantir's financial metrics for the quarter were robust overall, alongside an optimistic outlook. Importantly, total remaining performance obligations (RPO) swelled to $4.9 billion during the quarter, providing clear revenue visibility.