The U.S. Navy has awarded Palantir a contract worth hundreds of millions of dollars to manage the supply chain of its nuclear submarine fleet in the hope of reducing maintenance downtime.
U.S.-listed shares of the company rose 3% in overnight trading.
The deal marks an expansion of the company's work with the U.S. military in a sector that is a high-priority for the Trump administration.
The contract will initially focus on submarines and could expand to other types of vessels, including aircraft carriers and jet fighters, Navy Secretary John Phelan said Tuesday.
Palantir's software is designed to give the Navy more visibility into its supply chain, by replacing workers needed to manually track parts using spreadsheets, and better predict when parts are needed, according to the Navy and the company. Palantir CEO Alex Karp said manually tracking parts takes roughly 20,000 man-hours.
"It gives us more predictive analytics to understand when we're going to potentially have problems in the supply chain," he said. "Rather than hearing about a problem that day that will stop us, we will know 60, 90, 120, 180 days in advance that we've got it."
Palantir believes there are "not just months, but years to be saved with the rapid and widespread adoption" of its software, said Mike Gallagher, a former congressman who is now a Palantir executive.
The deal, worth $448 million, is being paid for with money from President Trump's signature spending bill, passed in July, said Jason Potter, the acting assistant secretary of the Navy for research, development and acquisition.
The aim is to speed up production of new submarines and labor-intensive overhauls of existing vessels.
The entire overhaul process is designed to take 18 months, but parts shortages often cause delays, according to Mark Montgomery, a retired Navy admiral who is senior director of the Center on Cyber and Technology Innovation at the Foundation for Defense of Democracies.
"Making sure parts are available where and when they're needed historically ... has been a challenge," Montgomery said.
The Navy says the program with Palantir will provide a comprehensive view of the supply chains and production capacity of shipbuilders in a bid to end unnecessary delays and cost overruns that have plagued shipbuilding.
The contract marks a significant expansion with the Navy for Palantir, which has contracts with the service going back at least a decade. Its more lucrative business sits elsewhere in the Department of Defense, particularly with the Army.
The deal with the Navy builds on a focus Palantir Chief Technology Officer Shyam Sankar has often spoken about -- Palantir's role in revitalizing U.S. manufacturing, including the country's struggling shipbuilding sector, by helping companies untangle complicated supply chain problems.
"China has 232 times more shipbuilding capacity than the United States, whose industry has consolidated to the point where we have to choose between building submarines for our allies or for ourselves," Sankar wrote last year.
Rebooting America's shipbuilding is also a key priority for the Trump administration. An April executive order calls for the expansion of shipbuilding through investment and other incentives.
Since President Trump returned to office, Palantir has landed new government contracts worth around $2 billion, according to federal contracting data. Its run has extended since 2019, with the Defense Department the largest single agency driving its government revenue growth.
Palantir's project with the Navy, called Ship OS, will initially include two major shipbuilders, three public shipyards and more than 100 suppliers, the Navy said.
The Navy repairs its submarines exclusively at government-owned shipyards. Submarines are overhauled every six to eight years, said Bryan Clark, a Navy expert who is a senior fellow at the Hudson Institute.
"The Navy's public shipyards have been terrible at the management process in general and they're extremely inefficient," Clark said. "There's a lot of dead time where submarines are just waiting because the right people and the material are not in the right place at the right time to start the job when they were supposed to start the job."
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