Core Insights - Palantir has been awarded a $10 billion contract by the U.S. Army, which is the largest single award the company has received to date [3][5] - The contract is primarily a consolidation of existing contracts rather than new revenue, effectively translating to about $1 billion per year over a 10-year period [6][7] - The revenue from this contract represents approximately 29% of Palantir's total revenue over the past 12 months, but its significance is diminished due to the nature of the award [9][10] Financial Performance - Palantir's operating profit margins have shown significant improvement, increasing from 5.4% in 2023 to an estimated 23.3% in 2024 [11] - The new contract is expected to remove contract-related fees, potentially allowing for further expansion of profit margins [11] - Despite the growth in revenue and profit margins, Palantir's stock remains highly valued, trading at 573 times trailing earnings and 255 times free cash flow, necessitating substantial earnings growth to justify its valuation [13][14] Market Context - The defense contracting industry is characterized by a mix of large and small contracts, with the Pentagon frequently awarding contracts in the range of $10 million to several billion [2] - Palantir's revenue has roughly doubled since 2021, indicating strong growth, but the sustainability of this growth is questioned given the high valuation of its stock [12][14]