To The Moon

We saw $Palantir Technologies Inc.(PLTR)$ gained 4.7% on the £1.5B UK Partnership, can this

In this article we will be sharing the breakdown of what the £1.5B UK partnership could mean for Palantir (PLTR), how rate cuts might affect it, the odds of more partnerships, and how one might trade PLTR via options.

I am holding PLTR for long-term, so I would like to trade PLTR with options to capture potential upside and also hedge against any risks that might bring PLTR to the downside.

What’s in the UK deal & how PLTR benefits

From recent reporting:

• Palantir has agreed to invest up to GBP 1.5 billion in the UK through to ~2030.

• Part of that is a £750 million multi-year contract with the UK Ministry of Defence focused on AI / defence / cybersecurity infrastructure etc.

• The deal includes creating about 350 high-skilled jobs in the UK.

• London is to become PLTR’s European defence business HQ.

How PLTR stands to gain:

1. Revenue visibility and scale – Large government contracts tend to provide durable, multi-year revenue streams, especially in defence/AI domains, which are seeing growing budgets in many Western countries.

2. Geographic expansion & strategic footprint – Having a European defence HQ in London improves its position in Europe, potentially smoother access to future government contracts, possibly less regulatory friction post-Brexit, etc.

3. Brand / credibility boost – A high profile UK + defence / AI deal can help Palantir win further contracts elsewhere. Defence and AI are sensitive, high-barrier sectors (security, compliance, trust), so proving capability in the UK helps.

4. Job creation & local plant – Local employment and investment can create political goodwill, possibly smoother regulatory / procurement paths in other UK / EU bids.

5. Innovation spillovers – Working with UK defence / AI/cybersecurity SMEs (mentioned in reports) might lead to co-innovation, localized solutions, possibly more profitable margin work. TipRanks+1

Will this partnership fuel an upside rally and will there be more?

Potential for upside rally:

The announcement gives a positive catalyst. Investors tend to reward clarity and high-visibility contracts, especially in tech/AI/defence. The stock reaction already reflects that (jump ~4-5% on this news).

If this deal helps materially with growth guidance (or beats expectations), it could spur further multiple expansion.

Also, AI / defence / geopolitical concerns are tailwinds; governments are increasing spending in those areas. If PLTR shows execution (on time, on spec, with good margins), optimism could push the stock higher.

Will there be more partnerships / contracts?

Likely yes, but with caveats:

PLTR has already been aggressively pushing into government / defence / AI worldwide. Given the strength of the UK commitment, that signals other governments may do similar.

However, competition is stiff (other defence-contractors, big cloud / AI players) and there are risk / regulatory / political hurdles (e.g. privacy, data security, export controls).

Scaling capacity (in personnel, compliance, cybersecurity, etc.) is needed; execution risk matters.

Some deals may take time to finalize (procurement cycles are long in government, regulatory reviews etc.).

So, more partnerships are plausible, especially in Europe, NATO countries, possibly even Asia or the Middle East, assuming PLTR can demonstrate UK success.

How Fed rate cuts affect PLTR & tech / growth names

Lower interest rates (or expectations of cuts) tend to help growth & high multiple tech / AI stocks like PLTR via several channels:

1. Discounted Cash Flow (DCF) valuations: Growth stocks have earnings/profits further out in the future. Lower rates → lower discount rate → inflates present value of those future earnings.

2. Cost of capital: Borrowing / financing costs go down, so companies can invest, scale, hire, do R&D at lower effective costs. If PLTR needs to build infrastructure / partnerships, cheaper capital helps.

3. Risk appetite / multiples expansion: Investors more willing to pay for growth when rates are low because the opportunity cost (vs bonds / safer yield‐assets) is lower. Multiples (P/E, etc.) tend to expand.

4. Macro stimulus effect: Rate cuts often coincide with (or are reactions to) slowing economic conditions. If rate cuts lead to better consumer / government spending, that can help demand for AI / defense / cloud / data analytics.

But some caution:

If rate cuts are seen as a signal of worsening economy, it could also bring uncertainty / risk aversion.

Inflation still matters; if inflation remains sticky, rate cuts may be smaller, or real rates may stay elevated.

Long‐term yields (10-year, etc.) might not drop much even if short rates do, if inflation or risk premia are elevated. That limits the benefit.

Risks / what could go wrong

It is good to also think of downside or moderating factors:

Valuation is probably rich already; quite a bit of good news may be priced in. Analysts seem mixed; some “Hold” ratings are out there.

Execution risk: delays in contract performance, cost overruns, regulatory / security issues.

Geopolitical or policy risk: defence contracts often require political stability / alignment. If UK politics shift, or public sentiment turns against certain kinds of surveillance or AI usage, that could weigh.

Competition risk from incumbents or new entrants.

Macro risk: inflation, interest rates staying higher than hoped, global economic slowdown or trade tensions could reduce government budgets or delay procurement.

Key Risk Triggers to Monitor

• UK Parliament / MoD updates → contract ramp speed.

• EU/UK AI regulatory legislation (esp. around military AI).

• Fed dot plot / meeting minutes (timing + size of cuts).

• Competitor announcements (MSFT/AWS/BAE wins).

• PLTR earnings calls → watch for revenue recognition timeline on UK deal.

Trading PLTR with options: possible strategies

As I am holding PLTR for long-term, I am considering options to play for upside (or hedge), here are some ideas + pros/cons.

Considerations specific to PLTR:

Implied volatility (IV) for PLTR may be elevated around news, earnings, geopolitical events; that increases premium. Be mindful of cost of long options.

PLTR implied volatility (IV) is 47.2, which is in the 12% percentile rank. This means that 12% of the time the IV was lower in the last year than the current level. The current IV (47.2) is -2.6% below its 20 day moving average (48.5) indicating implied volatility is trending lower.

Time horizon: Look at when UK / defence contract revenue starts flowing materially. If that’s 6-12+ months out, shorter‐dated options may not capture full upside.

Choose strikes wisely: Bullish spreads or deep out-of-the-money calls might offer high leverage but with higher risk of expiring worthless.

Use earnings dates, major government/contract announcements as catalysts; but also note that markets often price in expectations in advance.

Liquidity/margin: PLTR options liquidity / spreads, etc., matter—make sure to account for trading costs and slippage. You may go to Barchart to view these data.

Bottom line & outlook

Yes, this UK partnership is a meaningful positive for PLTR. It gives visibility, a strategic foothold in Europe, defensive sector exposure, and aligns with global tailwinds in AI & defence.

Rate cuts would likely amplify the positive, via improved valuations & reduced financing costs.

More such deals are probable, especially if PLTR executes well. But the timing / size / profitability of those may be mixed.

Using options gives you tools to magnify upside or protect downside but comes with cost (premium, volatility risk) and risk of time decay.

Palantir Scenario Map (6–12 months)

1. Bull Case (30% probability)

Price Target: $180–195

Catalysts:

• UK contract execution smooth, revenue ramp visible by Q4.

• Additional European/NATO partnerships announced (defence & AI).

• Fed cuts spark multiple expansion in high-growth AI names.

• Broader AI / defence sector tailwind continues.

Valuation View: Premium multiple justified, growth visibility strong.

Option Play:

Bull Call Spread: Buy $190 call / Sell $180 call (6–9 months out).

• Risk: premium paid.

• Reward: capped at $10 spread – premium.

• Rationale: Targets upside zone without overpaying for high IV.

2. Base Case (50% probability)

Price Target: $175–195

Catalysts:

• UK deal adds credibility but revenue recognition gradual.

• Moderate Fed cuts help tech multiples.

• Execution steady, but no major new partnerships until 2026 pipeline.

Valuation View: Already priced for growth, stock consolidates.

Option Play:

Call Calendar Spread: Sell short-dated $170 call, Buy longer-dated $185 call.

• Risk: stock spikes too quickly above strike.

• Reward: collects theta, benefits from steady grind higher.

• Rationale: Fits sideways-to-moderately-up movement.

3. Bear Case (20% probability)

Price Target: $160–180

Catalysts:

• Execution risk: delays or cost overruns in UK contract.

• Regulatory / political scrutiny in Europe on AI & data.

• Fed rate cuts seen as “too little, too late,” macro slowdown drags equities.

• Valuation correction in AI / defence peers.

Valuation View: De-rating to lower EV/sales multiple.

Option Play:

Protective Put (if long stock): Buy $180 put (6–9 months).

Or Bear Put Spread: Buy $170 put / Sell $160 put.

• Risk: limited to premium.

• Reward: Gains if stock corrects to $167–170 zone.

• Rationale: Hedge downside while capping cost.

Trade Implementation Notes

Earnings Dates: Palantir usually reports early November → catalyst.

IV Environment: Palantir tends to trade with elevated implied volatility (40–60%), making spreads (bull/bear) more cost-efficient than outright long calls/puts.

Time Horizon: Best to align expiries with 6–12 months, capturing Fed rate cut cycle + initial UK contract revenue contribution.

Summary

Palantir's £1.5 billion UK partnership is a significant positive catalyst, demonstrating its ability to secure large, international government contracts. This deal provides long-term revenue visibility, which can fuel an upside rally by reinforcing the company's growth story and attracting investor interest. The company has a strong focus on both government and commercial sectors, making it highly likely that more partnerships will be announced in the future.

Furthermore, a potential Fed rate cut would benefit Palantir as a growth stock. Lower interest rates reduce the discount rate used in valuation models, increasing the present value of the company's future earnings. This can lead to a higher stock price and is generally a positive signal for speculative, high-growth companies. However, a significant concern remains Palantir's high valuation, which could lead to volatility despite the positive news.

Appreciate if you could share your thoughts in the comment section whether you think PLTR would be able to see these partnership returns showed up in its Q4 earnings, and we could see PLTR aiming above $195 by end of 2025?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.