Palantir Stock Feels Heat as Pentagon Cuts Ties with Anthropic, Labels it a “Supply-Chain Risk” to U.S. Military

The U.S. military is taking drastic steps to cut ties with one of its most important artificial intelligence partners. According to Bloomberg, the Pentagon, which Defense Secretary Pete Hegseth now calls the Department of War, has officially notified Anthropic that the company and its products are considered a risk to the American supply chain. This major decision comes after a breakdown in talks over how the military is allowed to use Anthropic’s AI tool, known as Claude. While the military is currently using Claude for active operations against Iran, leadership has been told to move the military’s work to other providers over a six-month transition period.

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Pentagon Declares Anthropic a Risk as AI Disputes Escalate

The core of this breakup is a disagreement over the fundamental rules for using AI in war. Anthropic’s leadership wanted a contract that guaranteed their technology would not be used for mass surveillance of Americans or the deployment of autonomous weapons. However, a senior defense official told Bloomberg that the military will not allow a private vendor to insert itself into the chain of command by restricting the lawful use of critical tools. The Pentagon believes that these restrictions put U.S. soldiers at risk, leading to the “supply-chain risk” label which is usually reserved for companies from enemy countries.

Palantir Faces New Challenges as Military AI Needs Shift

This move creates a complicated situation for the military because Anthropic’s software is deeply woven into current defense systems. For example, the Maven Smart System created by Palantir PLTR -0.34% ▼ is used heavily by military operators in the Middle East and currently relies on Anthropic’s Claude AI as a key tool for managing data.

While removing this capability will be painful for the military in the short term, it creates a massive opportunity for other providers to fill the gap. If Palantir or its other partners can provide unrestricted AI tools that meet the Pentagon’s needs, they may be able to capture the billions of dollars in government revenue that Anthropic is now on track to lose.

Is Palantir a Good Stock to Buy?

Turning to TipRanks, Wall Street has a Moderate Buy consensus rating on Palantir Technologies stock based on 14 Buy, four Hold, and two Sell recommendations. The average 12-month PLTR stock price target of $191.76 indicates an upside potential of 25.6% from current levels.

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