Palantir plunges 12% as NY pension funds probe ICE contracts
NYC Comptroller demands human rights risk assessment of $169M immigration enforcement contracts
Palantir Technologies shares tumbled 11.6% on Thursday after New York's public pension funds demanded an independent human rights risk assessment of the data analytics company's contracts with U.S. Immigration and Customs Enforcement.
The stock dropped $18.34 to $139.54 in early trading, marking one of the software company's largest single-day declines since going public. The plunge came as New York City Comptroller Brad Lander, who oversees pension assets worth $266 billion, sent a letter to Palantir's board requesting a third-party evaluation of the company's involvement in immigration enforcement operations.
Lander's office highlighted a "stark reversal" in Palantir's relationship with ICE since 2020, when the company had pledged to review its work with the agency following employee protests. That scrutiny appears to have evaporated: Palantir's federal contracts with the Department of Homeland Security—which encompasses ICE—have nearly doubled to more than $970 million in 2025, according to government contract data.
The New York State Common Retirement Fund, which holds approximately 2.4 million Palantir shares valued at more than $430 million, is among the institutional investors raising concerns about potential legal liability and reputational damage from the immigration enforcement work. The company's government business has expanded beyond the controversial ICE contracts to include broader federal agency relationships, though the immigration enforcement work remains its most scrutinized.
At issue are two specific ICE agreements: a $139.3 million contract awarded in 2022 for "investigative case management operations" and "custom enhancements," plus a $30 million deal to develop the "ImmigrationOS" platform. This AI-driven system, scheduled for prototype delivery in September 2025, is designed to identify, track, and facilitate deportation of noncitizens through data mining—a technology that human rights advocates argue raises substantial civil liberties concerns.
Additional scrutiny has focused on Palantir's "Enhanced Leads Identification & Targeting for Enforcement" (ELITE) tool, which reportedly creates maps of potential deportation targets and assigns "confidence scores" to individuals' addresses. According to Electronic Frontier Foundation research, the system leverages data from sources including Medicaid, raising privacy alarms about the integration of healthcare records with immigration enforcement databases.
The stock's steep decline Thursday also reflected broader weakness in the software sector. Bloomberg reported that traders were piling into technology hedges as a rout in software stocks deepened, with Palantir among the notable decliners alongside established players including Microsoft, Oracle, and Salesforce. The iShares Expanded Tech-Software Sector ETF fell 3.2% in early trading.
Palantir maintains that it operates as a neutral technology provider, building tools rather than dictating their use. The company has asserted that its products adhere to data protection standards and has denied claims of constructing a "master database" for citizen surveillance. However, critics counter that the architectural design of AI systems inherently influences outcomes and can concentrate immense power within platforms that operate with minimal public oversight.
The New York pension funds' intervention marks a significant escalation in institutional investor activism surrounding Palantir's government contracts. Previous concerns had largely been voiced by human rights organizations including Amnesty International and the Electronic Frontier Foundation, which have long criticized Palantir's involvement in immigration enforcement operations that they say have led to family separations and deportations.
From a financial perspective, Palantir remains highly valued by Wall Street standards. The company trades at a price-to-earnings ratio of 232 times trailing earnings, reflecting investor enthusiasm for its artificial intelligence capabilities and commercial growth prospects. Analysts maintain an average target price of $190.75 per share, though ratings are mixed with 16 hold recommendations alongside seven buy ratings and four sell or strong sell ratings, according to market data.
The company's commercial business has shown strong momentum, with quarterly revenue growth of 63% year-over-year and profit margins of 28%. Yet its government contracts, particularly with ICE, have increasingly become a liability as ESG-focused institutional investors apply greater scrutiny to potential human rights impacts in their portfolio companies.
The broader implications extend beyond Palantir's stock price. Other major technology companies with ICE contracts—including AT&T and Deloitte—face similar pressure from activist investors and human rights groups. The scrutiny highlights growing tensions between lucrative government contracts and ESG considerations as institutional investors increasingly factor human rights assessments into their investment decisions.
Palantir's response to the pension funds' demand remains to be seen. The company has not yet issued a public statement regarding Lander's letter, and it is unclear whether Palantir will agree to the third-party human rights risk assessment requested by the New York City comptroller. With the ImmigrationOS contract scheduled to run through September 2027, the controversy appears unlikely to fade quickly.