Palantir Navigates Legal and Market Crosscurrents

Palantir Technologies finds itself at the center of two significant developments. The data analytics firm has intensified a major lawsuit against AI rival Percepta AI while simultaneously securing substantial new contracts within the U.S. defense sector. This juxtaposition highlights a company benefiting from robust government demand while its lofty market valuation faces scrutiny.

The company's core public sector business continues to demonstrate strength. During December, Palantir finalized new, lucrative agreements with both the U.S. Army and the U.S. Navy. The firm's platforms are primarily deployed for AI-powered threat detection and within complex decision-making environments.

These recent contract wins build upon a powerful third-quarter performance. Revenue derived from the U.S. government surged by 52% year-over-year. This growth reinforces Palantir's position as a central technology partner to U.S. agencies, rather than merely another software vendor.

Legal Battle Escalates Over Alleged Trade Secrets

On Thursday, December 11, Palantir significantly expanded an existing lawsuit against competitor Percepta AI. The core allegation is that the rival firm was built using stolen trade secrets. For the first time, Palantir has named Percepta's CEO and co-founder, Hirsh Jain, personally in the legal filing.

According to court documents reported on Thursday, former employees—including Jain—are accused of utilizing confidential documents and core intellectual property, described as "crown jewels," to launch Percepta. Palantir further alleges the startup poached at least ten former Palantir engineers shortly after its founding, thereby violating agreed-upon non-solicitation clauses.

This legal escalation was triggered by a forensic investigation conducted by Palantir. The company states it uncovered evidence of data theft, leading to the expanded allegations. The underlying message is unambiguous: Palantir is determined to legally fortify its technology leadership in the AI and data analytics domain.

This lawsuit fits a broader industry pattern where established players aggressively defend their "AI Operating Systems" against new entrants. Palantir's AIP platform is now broadly positioned across both government and commercial sectors, and the company signals that protecting this foundation is critical to maintaining its competitive edge.

Should investors sell immediately? Or is it worth buying Palantir?

Valuation, Price Action, and Insider Trading Activity

Despite the new contracts and legal offensive, the stock's rally has recently shown signs of moderating. While shares have advanced by well over 100% in the past twelve months, the current price sits approximately 11% below its recent 52-week peak. Closing at 159.50 euros on Thursday evening, the equity nevertheless trades notably above its 200-day moving average, underscoring a strong overarching upward trend.

From a fundamental perspective, the valuation remains ambitious. Reports indicate Palantir is trading at a price-to-earnings ratio exceeding 420, based on profits from the past twelve months. This is contrasted against markedly accelerated revenue growth, with sales increasing by 63% in the most recent quarter. Some market analysts urge caution, noting the stock appears "priced for perfection," meaning any disappointments could have a disproportionate negative impact.

Insider behavior has also drawn attention. Data points to notable net selling by company executives in recent years. While not uncommon for high-growth technology firms, market observers frequently monitor such activity as a sentiment indicator.

Competitive Positioning and Forward Look

Within its sector, Palantir has significantly outperformed both the S&P 500 and many technology peers in 2025. A key driver of this re-rating has been its successful transition from a pure government contractor to a more broadly based AI provider with a strong commercial clientele. Simultaneously, competition is intensifying in the AI-orchestration niche, with players like UiPath applying technological pressure.

What lies ahead? In the near term, the lawsuit against Percepta AI remains a focal point. A favorable outcome for Palantir could legally reinforce the protective "moat" around its technology and deter potential imitators. Conversely, a protracted or unfavorable legal process could reignite debates about the true uniqueness of certain solutions.

From a technical analysis standpoint, the shares are currently moving in a sideways range just below previous highs. The Relative Strength Index (RSI) reading of nearly 79 suggests an overbought condition, indicating a degree of market overheating. Two factors are likely to be particularly influential for future price movement: the progression of the Percepta litigation, and concrete details regarding the scope and duration of the defense contracts announced in December, which may offer early clues into revenue momentum for 2026.