Palantir Technologies Inc. (PLTR) had a rough week, and Friday isn't looking much better. The stock stayed under pressure as investors digested a pair of government contract controversies—one in the U.S. and one in the U.K.—while rising Treasury yields and a sky-high valuation added to the gloom.

Let's start with the Pentagon. Palantir is reportedly challenging the Defense Intelligence Agency over restrictions on bidding for a contract to modernize the agency's data analytics system, according to a filing obtained by Axios. The dispute adds another layer of uncertainty to Palantir's government business, which has been a key growth driver. Investors are now left wondering whether this is a temporary hiccup or a sign of deeper friction with the defense establishment.

Across the pond, things aren't much rosier. London's deputy mayor blocked the Metropolitan Police from signing a contract worth up to £50 million with Palantir. The proposed deal included a £25.3 million contract for 2026-27, plus an optional £24.8 million extension, aimed at supporting criminal investigations and internal reform programs. But the Mayor's Office for Policing and Crime (MOPAC) said the Met failed to demonstrate value for money and didn't properly test alternative suppliers. Deputy Mayor Kaya Comer-Schwartz also said the Met breached procurement rules by not getting required approval for its strategy.

City Hall officials also raised broader ethical concerns about whether public-sector procurement should consider a company's ethics and values. But current U.K. procurement law doesn't allow contracts to be rejected solely on that basis. Still, the optics aren't great for Palantir, which has faced criticism over its work with U.S. Immigration and Customs Enforcement and the Israeli military.

The Metropolitan Police pushed back, arguing that advanced software tools are critical for improving efficiency and modernizing operations amid a £125 million funding shortfall and declining staffing levels. Palantir also defended its role, noting that multiple U.K. police forces already use its software. The company pointed to work with Bedfordshire Police on identifying domestic violence risks under Clare's Law and helping the Met investigate corruption within its own ranks.

Meanwhile, the macro backdrop isn't helping. Treasury yields remain elevated, with the 10-year at 4.58% and the 2-year at 4.06%. The CME FedWatch tool shows a 96.8% probability that the Fed will hold rates steady at its June meeting. For a stock trading at a P/E of 154.4x, higher rates are a headwind—they discount future cash flows more heavily, making expensive stocks look even pricier.

Palantir develops AI, analytics, and automated decision-making software for government and commercial customers through its Gotham and Foundry platforms. The next big catalyst is the August 3, 2026 (estimated) earnings report. Analysts expect EPS of 33 cents (up from 16 cents a year ago) and revenue of $1.81 billion (up from $1.00 billion). That's impressive growth, but the valuation leaves little room for error.

Analyst consensus remains bullish: a Buy rating with an average price target of $189.38 (range: $90 to $230) from 27 analysts. Recent moves include Rosenblatt maintaining a Buy and $225 target on May 21, Citigroup raising its target to $225 on May 6, and Argus Research upgrading to Buy with a $190 target on May 6.

As of Friday premarket, Palantir shares were up 0.05% at $137.48. Not exactly a relief rally, but at least they're not falling further—for now.