Will Microsoft's AI Models Break Into Palantir's Government Turf?

Microsoft (MSFT) could give Palantir Technologies (PLTR) competition for government artificial intelligence projects, according to a report. Palantir stock sold off Monday on the report, but shares were up in early trading Tuesday.

The Information on Monday reported that federal agencies such as the Department of Defense have recently been testing AI models from Microsoft for data analytics projects. OpenAI's models also are being evaluated, the report said.

On the stock market today, Palantir stock rose 0.2% to 158.25 before the market open. On Monday, shares fell over 3% in intraday trading but closed down only 0.6%.

Palantir stock has climbed about 110% in 2025 ahead of its second quarter earnings report on Aug. 4. Shares hit an all time high of 160.39 on July 25.

The maker of data analytics software holds a premium valuation. Palantir stock has gained amid views that the company seems poised to win more U.S. government business under the Trump administration. Also, retail investor enthusiasm for generative artificial intelligence plays has boosted Palantir stock, although commercial-related revenue has yet to ramp up for the company.

In the Q2 Palantir earnings report, Wall Street analysts project 54% profit growth to 54 cents with revenue rising 38% to $937.5 million.

Palantir Stock Technical Ratings

The Relative Strength Rating of PLTR stock stands at 99 out of a best-possible 99.

Palantir stock holds an Accumulation/Distribution Rating of B. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. (A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.)

Also, Palantir stock holds a Composite Rating of 99 out of a best-possible 99, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

PLTR stock holds a 21-day ATR of 3.56%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.

IBD suggests stocks with ATRs of up to 8% in the current market. However, Palantir is extended beyond a buy point and needs to form a new base to be actionable.

Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, quantum computing, cybersecurity and cloud computing.

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