Paying the Palantir Tax
In Washington’s new defense ecosystem, proximity to Peter Thiel may be worth more than profits.
It was a quiet Sunday morning, November 24, when Lockheed Martin got blindsided—not by a defense contractor, but by a tweet. Elon Musk, with his usual flamboyance, posted a video of flying drones, casually mocking traditional defense giants: “Meanwhile, some idiots are still building manned fighter jets like the F-35.”
By Monday, Lockheed shares had shed 5%. Then came another twist. Just two days later, Donald Trump Jr. joined the advisory board of drone startup Unusual Machines, sending the company’s stock soaring more than 100% overnight. That company, founded in 2019 by Jeff Thompson, was virtually unknown until the right political winds began to blow in its favor.
Interestingly, Thompson's name came up again just weeks later. On December 16, another of his ventures, Red Cat, inked a partnership with Palantir Technologies. On paper, the pairing seemed unusual: Red Cat had posted quarterly revenues of just $1.5 million, while Palantir had reported $827 million. But the real story wasn’t about balance sheets. It was about access, narrative, and positioning.
Palantir, the de facto gatekeeper of government tech cred, has evolved into something more than a software company. It is, increasingly, the go-to platform for companies seeking not just operational tools, but political shelter. Peter Thiel’s brainchild has positioned itself as a symbol of national alignment—a badge that suggests proximity to power.
Thiel's influence in Washington has only grown. He hired JD Vance into his investment firm in 2017, then bankrolled his ascent into the U.S. Senate with a $15 million donation, effectively launching a political proxy with roots in Silicon Valley. Thiel’s constellation of connections now extends deep into the government ecosystem, a reality not lost on startups and contractors looking for allies in uncertain times.
Hence the logic: if you’re a small defense or drone company vying for survival amid Pentagon realignment, partnering with Palantir might be less about data visualization and more about staying relevant. As one defense source put it, "You don't buy Palantir to solve analytics—you buy it to hedge against being cut."
Palantir's partner list is telling. On one end, there's BP, a multinational energy conglomerate. On the other, there are players like BigBear.ai and Red Cat—names with modest financials but grand ambitions. Their logic is strategic: in a market where perception shapes procurement, being associated with Palantir is a reputational asset.
This week's Financial Times article highlighted a similar phenomenon: companies buying small ad slots on X just to stay in Elon Musk's good graces. In the defense world, Palantir offers a comparable service, only with a sharper edge. Investors don't just believe in Palantir's revenue growth; they believe in its network. Rumors even circulated that CTO Shyam Sankar might be tapped for a senior Pentagon post.
Notably, as Pete Hegseth cut firms like Accenture and Oracle for their bloated contracts, Palantir remained untouched. Oracle, despite its $16 billion government contract, has faced increasing scrutiny. Musk, once close to Larry Ellison, hasn't spared him with DOGE efforts. Palantir, meanwhile, seems immune.
That immunity isn’t coincidental. Thiel remains embedded in Musk’s world, with stakes in SpaceX, Neuralink, and Boring Co. His allies have quietly taken roles inside the Department of Government Excellence (DOGE), which increasingly resembles a tech-drenched policy shop. Palantir, as a result, is no longer just thriving—it’s dictating terms.
Another example is Anduril, a defense startup that might be valued at $28 billion, backed heavily by Thiel’s Founders Fund. The line between lobbying muscle and technological superiority is blurring fast, and Thiel is holding the pen. Anduril and Palantir formed a consortium to take on traditional contractors like Lockheed Martin. In March, the latter lost a $20 billion contract for a new aircraft to Boeing. Did Elon Musk have something to do with it?
Even partnerships aren’t guarantees, however. Booz Allen Hamilton once celebrated its alignment with Palantir, but was still sidelined when priorities shifted. No badge is foolproof. But in a political economy increasingly shaped by alliances rather than output, Palantir offers smaller companies a chance to stay in the room.
It may not be a product decision. It may be the new price of admission.
This publication is for educational and informational purposes only and does not constitute financial, investment, or trading advice. Readers are solely responsible for their own investment decisions. The author may hold positions in the securities mentioned.