🚀 Palantir Deep Dive

Market Overview
Read time 1.4 minutes

Year To Date Performances:

Palantir’s $430 Billion Question: How Long Can Gravity Be Cheated?

When Palantir Technologies hit the New York Stock Exchange through a direct listing in 2020, few expected the Denver-based data analytics firm to join the ranks of America’s most valuable tech companies in less than five years. Back then, it was a niche player, best known for its classified work with U.S. intelligence agencies and its enigmatic, philosophy-quoting CEO Alex Karp. Today, it commands a market valuation north of $430 billion — bigger than many of the “Magnificent Seven” in everything except actual revenue — and has rewarded early believers with a staggering 1,700% share price surge.

The latest milestone came last quarter, when Palantir crossed the $1 billion quarterly revenue mark for the first time, sending its stock to fresh highs and cementing its reputation as one of the market’s most potent AI plays. Yet that record haul masks a curious imbalance: while the company’s government contracts are booming — up 53% year-over-year to $426 million — its international commercial business has actually slipped. Roughly three-quarters of all revenue still comes from the United States, and growth abroad remains elusive despite AI’s supposed universal appeal.

For Washington, Palantir has become indispensable. Its software underpins military decision-making, logistics, and battlefield planning — capabilities the Pentagon is now willing to pay heavily for. In recent months, Palantir has locked in a potential $10 billion Army contract and a $795 million expansion of its artificial intelligence battlefield systems for the Department of Defense. Karp has never been shy about the company’s ideological positioning, telling investors this month, “We still believe America is the leader of the free world… we should give our government an unfair advantage.”

The retail investor crowd, for its part, has embraced Palantir with a fervor normally reserved for meme stocks. According to Goldman Sachs, small investors plowed $1.2 billion into the shares in July alone, helping keep its price above $100 since April. The stock last traded in single digits in 2023, before beginning its now-legendary climb. The allure is simple: Palantir’s AI-driven software is seen as a rare fusion of cutting-edge tech and guaranteed government demand — a combination investors hope will deliver compounding returns for years to come.

But those investors are paying dearly for the privilege. Palantir’s forward price-to-earnings ratio hovers around 280, a level normally reserved for biotech startups or market bubbles. By contrast, Apple and Microsoft trade around 30 times forward earnings, despite quarterly revenues of $94 billion and $76 billion, respectively. Even Nvidia, the poster child of the AI boom, sits at just over 40 times. Such lofty valuations mean the market is either looking at Palantir as the defining AI stock of the decade — or ignoring a chasm between hype and fundamentals that could eventually matter.

For now, Karp is enjoying the view from the stratosphere. “This is a once-in-a-generation, truly anomalous quarter,” he told analysts, in a remark equal parts pride and provocation. “We’re sorry that our haters are disappointed, but there are many more quarters to be disappointed.” If history is any guide, markets eventually demand gravity be obeyed. But for Palantir, whose software is built to find patterns others can’t see, perhaps the greatest pattern it has identified is how to convince Wall Street that the sky is no limit at all.

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Liam Gill