TLDR
- Palantir stock dropped 7.5% on Friday after reports revealed security flaws in an Army battlefield communications network
- An internal Army memo labeled the NGC2 prototype platform as “very high risk” due to fundamental security problems
- The system allows any authorized user to access all applications and data regardless of clearance level with no logging
- Anduril received a $99.6 million contract in July with partners including Palantir to develop the NGC2 platform
- Third-party applications in the system showed 25 high-severity code vulnerabilities and lacked proper security assessments
Palantir Technologies stock closed down 7.5% on Friday at $173.07. The drop came after reports surfaced about security problems in a battlefield communications network the company is developing with Anduril Industries.
An internal Army memo described the NGC2 platform as having fundamental security issues. The assessment was written by Gabrielle Chiulli, the Army’s chief technology officer authorizing official, in September.
The memo labeled the system as “very high risk.” It warned that adversaries could gain persistent undetectable access to the network.
The platform is designed to connect soldiers, sensors, vehicles, and commanders with real-time battlefield data. It represents a next-generation approach to military communications.
Friday’s decline pushed Palantir stock through its 21-day moving average. The stock had cleared a 185.75 cup-with-handle buy point just on Thursday.
The sharp reversal triggered the 7%-8% sell rule for investors who bought the recent breakout. Despite the drop, Palantir stock has gained over 128% so far in 2025.
Critical Security Vulnerabilities
The Army memo identified several specific problems with the NGC2 system. One major issue involves access control.
Any authorized user can access all applications and data regardless of their clearance level. The system also lacks a logging mechanism to track user actions.
Third-party applications integrated into the platform had not undergone proper Army security assessments. One application alone revealed 25 high-severity code vulnerabilities.
These findings raise questions about the readiness of the system for deployment. The vulnerabilities could compromise sensitive military operations and data.
In July, the Army awarded Anduril a $99.6 million contract to develop the next phase of the NGC2 platform. Partners on the contract include Palantir, Microsoft, Striveworks, Govini, Instant Connect Enterprise, and Research Innovations.
Army Response and Contract Context
Leonel Garciga, Army chief information officer and Chiulli’s supervisor, provided a statement about the memo. He said the report was part of a process that helped in triaging cybersecurity vulnerabilities and mitigating them.
The Army is expected to approve more prototype projects for NGC2. Lockheed Martin received a $26 million contract in early September to develop a different NGC2 prototype architecture.
NGC2 could serve as a foundational piece for a larger integrated Space Dome data network. The Golden Dome air and missile defense shield is expected to cost $175 billion or more.
Anduril was founded by former Facebook executive Palmer Luckey and three former Palantir executives. The company is viewed as a challenger to traditional defense contractors.
Anduril has been developing pilotless fighter jets and other autonomous systems. The company is working with SpaceX and Palantir on a satellite-based defense system proposal, according to reports.
Palantir stock pulled back from an all-time high of $190 reached on August 12. The stock has gained traction on expectations of increased government business during the Trump administration.
Palantir holds a Composite Rating of 99 out of 99 according to IBD Stock Checkup. The stock also has an Accumulation/Distribution Rating of B, indicating moderate institutional buying.
The Army memo was first reported by Breaking Defense and Reuters in early October.
