Defense Realignment: Lockheed Martin vs. Palantir
Both companies crushed earnings, then the midterms hit and both stocks tumbled. One defense giant built contracts to survive a budget fight, while the other bet on corporate AI. Which model holds up when Washington tightens the purse?
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Lockheed Martin (NYSE:LMT | LMT Price Prediction) and Palantir (NASDAQ:PLTR) both beat estimates and raised guidance in their third-quarter reports. Then the midterms arrived. Democrats’ midterm victory stoked concerns about pressure on the Pentagon budget, and that puts two very different defense models up against the same political risk.
Interceptors Carry Lockheed While Corporate AI Carries Palantir
Lockheed posted EPS of $7.97 vs. $7.52 expected on revenue of $20.71 billion, up 11.3%. Missiles and Fire Control did most of the work, rising 24% on PAC-3, THAAD, GMLRS and PrSM ramps. A $52.5 billion PAC-3 MSE award raised backlog to a record $292 billion, which gives Lockheed years of factory work. CEO Jim Taiclet summed up the pitch in one line: “Our product is deterrence.”
Palantir grew revenue 95.9% to $2.31 billion, with adjusted EPS of $0.44 vs. $0.41 expected. Revenue mix changed as U.S. commercial revenue reached $984 million, up 148%, and surpassed U.S. government revenue of $953 million for the first time. One industrial materials customer turned a nearly $3 million pilot into a $29 million ACV deal, which shows how quickly deployments of AIP (Palantir’s Artificial Intelligence Platform) can scale up.
| Business Driver | Lockheed Martin | Palantir |
|---|---|---|
| Growth Engine | Interceptor and munitions production | AIP and Sovereign AI deployments |
| Core Customer | U.S. government and allies | U.S. enterprises, now its largest section |
| Key Vulnerability | F-35 Lot 20 costs exceeding authorization | TCV growth of just 6% |
Lockheed Locks In Contracts as Palantir Diversifies Away
Lockheed’s answer to budget risk is contract structure. Munitions deals now run seven years, with ten years for the F-35, and include recovery provisions if Congress later cuts volumes. That protection has yet to be tested in a contested appropriations fight. Fiscal 2027 opened under a continuing resolution, so delays are already showing up.
Palantir keeps its defense franchise through Maven, which now has more than 100,000 users. Even so, commercial demand increasingly sets the growth rate. That shields it from Pentagon belt-tightening, but management said early Sovereign AI contracts run shorter than usual. Stock-based compensation also rose to $318.9 million from $172.3 million, which is a large dilution cost.
Both stocks fell in the post-election selloff. Palantir fell 12.89% over the past week and Lockheed fell 10.97%. Year to date, Lockheed is still up 19.38% while Palantir is down 9.77%.
Budget Votes and Contract Renewals Come Next
My focus will be on whether F-35 Lot 20 gets funded and whether reconciliation money makes it a Democratic House. For Palantir, you should keep an eye on whether short Sovereign AI deals renew at larger sizes, as management expects.
Why Lockheed Looks Sturdier Through the Budget Fight
Lockheed has a more defensive profile through this period. Its backlog, multiyear protections and 24th straight dividend increase provide a cushion if budgets get tighter. Palantir is the stronger business on growth, but a P/E near 227 leaves little margin for error on renewals. That comparison would changed if Palantir’s bookings start growing as fast as its revenue.
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Alex Sirois is a financial writer with experience spanning both retail and institutional investing. He has written for InvestorPlace and held roles at BNY Mellon and Bernstein, giving him a perspective that bridges Main Street portfolios and Wall Street analysis.
Alex holds an MBA from George Washington University and has built his career across multiple industries, including e-commerce, education, and translation — a breadth of experience that informs how he breaks down complex financial topics for everyday investors. His writing is conversational, actionable, and grounded in long-term, buy-and-hold investing principles.
At 247 Wall St., Alex focuses on delivering analysis that is both accessible and useful, with a clear emphasis on helping readers make more informed decisions with their money.
