Copyright The Street
By any measure, Palantir (PLTR)—an early AI adopter deeply penetrated in the U.S. defense industry—has been successful. Its revenue soared 48% in the second quarter versus the same period a year earlier. And its operating income for the 12 months ended in June came in at $569.5 million, pacing well ahead of FY 2024’s $310.4 million. But after years of benefiting from equity markets’ insatiable enthusiasm for AI winners, especially those able to fulfill high-security government contracts, Palantir’s valuation has reached nosebleed levels, with a forward price-to-earnings ratio (P/E ratio) of 217 times. Most of Palantir’s stockholders, especially retail holders whose dedication to the company runs deep, likely don’t care. But its high valuation may lead some to look for alternative ways to buy into the trend of defense and security agencies’ increasing demand for AI tools. For long-term investors wondering if now might be the right time to diversify away from Palantir, the company’s better-priced competitors may be worth a look. Palantir rivals poised to profit from Defense Department deals Hiring patterns tracked by ClearanceJobs.com reveal a tight cohort of publicly-traded AI tech companies that, like Palantir, are actively recruiting for security-cleared positions. The data offers a unique window into each company’s trajectory and the breadth of its partner ecosystem—by measuring job postings by clients, partners, and subcontractors seeking candidates proficient in that company’s platform. Spoiler alert: Palantir remains by far the dominant player, with only one rival—the much smaller ServiceNow (NOW)—beginning to build recruiting momentum for security-cleared professionals. ServiceNow’s recently reported Q3 earnings exceeded guidance and included a revised forecast for subscriptions that sent its stock sharply higher after the close. From January to June 2025, Palantir and its partner ecosystem posted an average of 363 new listings each month seeking security-cleared professionals for AI roles using Palantir’s technology. This pace rose to 416, 467, and 523 from July through September—signaling strong expansion of Palantir’s defense-related AI business. However, recent reports have raised concerns about the firm: one cited a U.S. Army warning that its joint communications network faces “fundamental security” risks, and another questioned Palantir’s decision not to bid on the UK’s digital ID project. Here’s a look at the rest of the field: ServiceNow hiring for defense jobs climbs ServiceNow is the most consistent challenger. Like Palantir, it offers critical AI tools and serves the defense sector. Its Q3 revenue grew 20.5% year over year—about half Palantir’s pace—but its stock trades at a far lower forward P/E (45 vs. 217). More AI Stocks: More police agencies adopt AI, raising efficiency — and concern How AI Could Monitor Brain Health and Find Dementia Sooner ChatGPT latest user perk sparks controversy Bezos’s AI bubble warning backed by big names in banking Hiring data from ClearanceJobs shows a sharp uptick in demand for AI professionals with security clearances tied to ServiceNow’s technology, jumping from 30 to 69 per month early in 2025 to 130 in August and 76 in September. This suggests growing defense-related AI momentum. Despite that strength, while PLTR has soared more than 150% in 2025, NOW is down 2.5% year to date. C3.ai defense-related opportunity Founded by data management veteran Tom Siebel, who sold Siebel Systems to Oracle for $5.8 billion in 2006, C3.ai (AI) develops enterprise AI software and counts major clients such as Shell, Bank of America, and Nucor, a steelmaker. Big defense customers include the U.S. Army and Air Force, and shipbuilder Huntington Ingalls (HII). Following Siebel’s health issues, C3.ai revenue fell sharply in its fiscal Q1 ending July, and ClearanceJobs data shows only two defense-related AI job postings in the first nine months of this year—suggesting limited near-term growth in that segment. However, new CEO Stephen Ehikian—formerly with Salesforce and the U.S. GSA—has overhauled leadership, adding seasoned executives from Oracle and other firms. C3.ai still reported 266 active production deployments as of Q1, indicating a sizable base of ongoing projects. The company is not yet profitable and therefore lacks a P/E ratio, but it trades at a price-to-sales ratio of about 6.7x, well below Palantir’s roughly 137x, reflecting both its slower growth and potential upside if execution improves. IBM’s defense department job growth steady IBM (IBM), like C3.ai, has built its own AI platform, WatsonX.ai, which enables partners to train and deploy generative AI and machine learning models. In May 2025, IBM won a $48 million Defense Department contract for its NorthPole AI chip, and defense contractors utilize its technology for logistics, inventory management, and cybersecurity. ClearanceJobs data shows AI roles tied to IBM’s tech holding steady at a relatively low level in 2025—with a high of 19 in July and 4 in September. IBM’s third-quarter pre-tax operating income rose 22% year over year to $3.0 billion, and its stock trades at a forward P/E of 24. Booz Allen Hamilton relies heavily on government checks Unlike Palantir and ServiceNow, which serve both government and private clients, Booz Allen (BAH) earns virtually all of its revenue from Washington. Its shares are down 34% in 2025, likely reflecting concerns about Trump administration budget cuts. Booz has its own Pentagon-only AI software and also integrates platforms like Palantir’s. Revenue dipped 8.1% year over year to $2.9 billion in its fiscal second quarter, reported on Oct. 24. Net Income was $175 million, a 55.1% decrease, and its adjusted earnings per share dropped 17.7% year-over-year. Signs point to recovery: its backlog rose 2.9% to $40 billion, and ClearanceJobs data shows increased recruitment for individuals with security clearances for AI-related positions—from an average of 18 ads per month in early 2025 to 28, 32, and 41 in July, August, and September. SAIC (SAIC) also competes for government AI contracts Like Booz Allen, SAIC (SAIC) earns most of its revenue from the U.S. government and implements other firms’ AI tools—such as ServiceNow’s—for federal clients. It also has its own AI platform, built around Koverse, a 2021 acquisition that enables AI and machine learning on sensitive data. SAIC’s latest quarter showed a slight year-over-year sales decline, but a strong book-to-bill ratio of 1.5, signaling likely improvement ahead. The stock trades at a low forward P/E of 11. From February to September 2025, SAIC posted no more than five security-cleared AI positions per month, showing low presence in defense-related AI. Future contracts or acquisitions could change that.
