Palantir just signed deal that could shift AI power balance

Palantir may have just made the most crucial move of the year, yet it didn't come with a big launch or viral demo.

Instead, it came via a collaboration announcement with Lumen Technologies, a telecom company that isn't usually discussed in the same language as AI leaders. But this isn't a normal arrangement for infrastructure. CEO Alex Karp thinks this silent alignment might determine who sets the rules for AI and who gets left behind.

Karp told Fox Business:

We're gonna either have AI and determine the rules, or our adversaries will have it, and they'll determine the rules.

“We're in an arms race here,” he ominously said.

Karp has been warning for a long time about how AI may hurt the competitiveness of the U.S. and the power of big companies. But this contract reveals that his firm is no longer happy just sounding the alarm; it's now constructing the backend. Lumen provides the pipes, while Palantir supplies the models. They promise real-time data transportation and large-scale inference at the edge, focusing on industries where latency is not only expensive but also very important.

The timing is important. Palantir isn't trying to get attention with headlines. With elections coming up, data center costs going up, and AI governance getting a lot of attention from regulators, they aren't trying to get attention. It moves things around on a larger board.

Why Palantir chose Lumen — and why it matters now

It may seem strange that Palantir (PLTR) chose Lumen (LUMN) as a partner.

Lumen isn't a well-known brand in the AI field, but it owns and runs one of the biggest fiber networks in the U.S. This is the sort of infrastructure required to transmit data quickly, safely, and on a massive scale. That's the point where Karp thinks most businesses will run into trouble.

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“This is why these infrastructure things are crazy important,” he said. “In order to make it work, what do you need? You need infrastructure that can actually run the models, get the data there in a secure and cheap enough way.”

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Palantir isn't simply interested in speed; they're also interested in leverage. The company's ontology-based approach to AI needs access to real-time, operational data from customers in the telecom, energy, and military industries. By putting its platform directly into a communications backbone like Lumen's, it skips a step and gets closer to the front lines of making decisions in real time.

An arms race without missiles — but with consequences

Karp's words were not subtle.

The phrase "arms race" means that one side wins and the other loses. This collaboration seems like it is getting ready for that type of world. It makes Palantir not merely a software company, but also a systems architect for stopping things in the digital age.

Transactions like these are more than just ways to grow a business; they're also about politics. In a time when AI regulation is becoming stricter and countries are racing to make their infrastructure stronger, these transactions are more than just business deals. Karp's claim that enemies might "build it, and we will be buying everything from them, including our ideas of how to run our country," seems exaggerated at first, but when you think about where generative AI, sovereign clouds, and military tech are all coming together, it makes sense.

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People who don't like Palantir typically say that the corporation makes threats seem worse than they are to get contracts. The U.S. is secretly reclassifying AI as a vital national asset, and politicians are clamoring for guardrails. The danger isn't overreaction anymore. It's too late.

What this means for investors — and where Palantir could go next

Karp said the Lumen transaction is "a very large deal, and we're very serious about it." The entire financial parameters of the agreement have not been made public. That may not be enough for investors.

Palantir shares have increased by more than 35% over the last three months, driven by the company's acquisition of additional government contracts and increased business in the private sector. However, investors on Wall Street remain divided on the company, with some concerned about its value and the potential that it won't follow through on sky-high expectations.

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Still, this Lumen move might change that story, not only because of the size of the transaction but also because of how long it will be visible.

Palantir’s Q2 2025 financials show a company hitting scale:

• Revenue: $1.004 billion, up 48% year over year.
• U.S. commercial revenue: $306 million (up 93% YoY); government revenue: $426 million (up 53% YoY).
• Adjusted operating income: $464 million (margin: 46%).
• Free cash flow: $569 million (margin: 57%).
• Net income (non-GAAP): $327 million.
• Raised guidance: Full-year revenue now projected between $4.142 billion and $4.150 billion.

With so much momentum, the Lumen integration is more than symbolic. It shows that Palantir wants to be the best at analyzing data and the infrastructure it operates on. It may be a turning point for long-term holders to become more deeply integrated into America's digital backbone.