US Navy bets $448M on Palantir AI to speed shipbuilding | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

The U.S. Navy announced an ambitious plan this month that could change the way America builds its warships. Not many in the defense world saw this coming.

ShipOS is the name of the program that teams up the service with Palantir Technologies in a big digital push to bring AI and real-time data integration deep into the country’s maritime industrial base.

As Navy Secretary John Phelan said in the official announcement:

That declaration, made with Palantir CEO Alex Karp, is a big bet on software to address issues that have been plaguing U.S. shipyards and their huge networks of suppliers for a long time.

Many academics are now wondering whether this risky experiment will set the standard for how governments use AI or if it will lead to something far worse.

The U.S. Navy has a high-stakes AI experiment underway with ShipOS.

Photo by Bloomberg on Getty Images

The Navy’s new operating system for industry

ShipOS is more than simply a software update. Secretary of the Navy John Phelan says it’s “a new way of doing business.”

The platform, based on Palantir’s Foundry architecture, combines data from old ERPs, spreadsheets, supplier databases, and even hand-drawn drawings. It then uses AI to find small problems and stop them before they become bigger ones.

The promise? Full visibility of the supply chain and predictive alarms that can let management know 60, 90, or even 180 days in advance if a component, worker, or procedure is about to fail.

In a world where Chinese shipyards make a lot more ships than do American ones, that type of planning is important. America needs “a true Golden Fleet at sea,” Phelan said in remarks this fall. “ShipOS helps us get there.”

ShipOS reduces manual hours to machine minutes

Pilot deployments indicate how much trouble ShipOS might cause. The software enabled completion of a planning activity at General Dynamics Electric Boat — one that typically required 160 hours of human labor — in less than 10 minutes.

Meanwhile, Portsmouth Naval Shipyard decreased the time it takes to evaluate documents from weeks to less than one hour.

These are not trivial changes; they might transform the speed and accuracy of U.S. shipbuilding. China is the world leader in naval production, so speed is less of a luxury and more of a strategy.

Results of the sample:

160 hours to 10 minutes: Electric Boat’s planning task post-ShipOS
Weeks to under 1 hour: Portsmouth’s review workflow timeline
100-plus suppliers already linked into the ShipOS network

Using AI to compress timelines might cut delivery times by months and save billions of dollars in operational expenses and inefficiencies.

Why ShipOS could reshape Palantir’s business model

This isn’t simply another federal deal for Palantir. ShipOS might be the company’s biggest and most scalable project thus yet.

The $448 million grant will pay for two years of rollout, but after that, the industrial base will be responsible for ongoing support. This means Palantir will make money every time the program meets performance goals.

More Palantir

This agreement ties Palantir even more closely to the national security supply chain, providing it a strategic advantage that Microsoft, AWS, or Google haven’t been able to copy.

Palantir is banking that ShipOS will become the standard for AI-driven operations in the federal government.

Financial benefits of ShipOS for Palantir:

Palantir expects to generate over $1 billion in revenue during the third quarter of 2025, primarily from government clients.
ShipOS has an initial contract value of $448 million.
Under a recurring revenue model, shipyards and suppliers pay to keep ShipOS running if it works.

ShipOS was labeled a “watershed” contract by Wedbush Securities. It shows how Palantir has changed from a seller of point-solution analytics to a supplier of industrial infrastructure.

Shipyards, contractors, suppliers may be first to profit

ShipOS offers big benefits for those who get on board early, but it also poses hazards for those who don’t.

Shipyards, contractors, and tech-savvy suppliers will probably be the first to profit. Those who don’t adapt might lose contracts or have to pay fines for not meeting AI-optimized deadlines.

Who wins:

Electric Boat: Delivering additional Virginia-class submarines means cutting down on production time.
Huntington Ingalls is next in line to get ShipOS integration.
Public yards: Portsmouth, Norfolk, Pearl Harbor, and Puget Sound are next.

Who may lose:

Legacy software vendors: Palantir’s integrated platform has put them out of business.
Vendors that don’t work together: They might be dropped if they don’t do well.
Bureaucratic holdouts: ShipOS’s speed may not match up with slower decision-making.

The change in culture is exactly as profound as the change in technology: excuses based on stories are replaced with data-driven responsibility. That won’t be easy for everyone.

Is this the Pentagon’s Amazon Web Services moment?

People are already wondering whether ShipOS may be used as a model for AI cloud infrastructure across all levels of government. Secretary of Defense Pete Hegseth also just announced GenAI.mil, a centralized AI platform for all parts of the Defense Department.

This suggests the Pentagon is preparing for AI on a large scale.

ShipOS might change how the federal government handles logistics in the 2020s, much like AWS transformed businesses’ handling of IT in the 2010s. And if Palantir does what it says it will do, its government competitors will have to catch up.

Potential next steps if ShipOS succeeds:

“DepotOS” for Army vehicle maintenance
“AirBaseOS” for Air Force aircraft readiness
FEMA, VA, FAA: Civilian rollouts could follow if ShipOS proves scalable.

The long-term goal is clear: a national security-industrial base that runs on shared, predictive, AI-powered infrastructure.

Strategic context and why it matters

The timing isn’t a coincidence. China builds almost two-thirds of all ships in the world. American yards make just a small part of it. The Navy’s 2026 budget focuses on building more submarines and expanding the fleet. It calls for 19 new ships and gives billions to repair yards.

Both parties agree to bring important skills back to the U.S. and make logistics more digital. ShipOS matches this story perfectly: It’s a high-tech solution for a strategic asset that isn’t working well.

Key takeaways on ShipOS and Palantir:

$29 billion allocated for shipyards in the fiscal 2026 budget.
China advantage: Global lead in ship orders and construction speed.
Domestic urgency: ShipOS is framed as “Warp Speed for Warships.”

The Navy isn’t just betting on software with ShipOS. It’s a bet on a future where AI is the main part of industrial defense.

High stakes, higher expectations

If ShipOS works, it could lead to a new wave of AI-native infrastructure in the U.S. government. If it fails, it will be a warning story worth $448 million.

For now, it looks like Palantir has the upper hand, and investors are keeping a close eye as the story unfolds.