Controversial AI and defence technology stock Palantir has become the poster child for the AI mania – soaring valuations, sharp elbows and a chief executive who thrives on friction.
Palantir tanked during last month’s sell-off but has enjoyed a blistering rebound, roughly doubling since April’s bottom and driving its market capitalisation above $300 billion (€268 billion).
Fuelled by AI enthusiasm and proximity to power, the stock surged again after chief executive Alex Karp joined Donald Trump on a business-heavy visit to Saudi Arabia. While Palantir wasn’t named in any official deals, it is seen as a likely beneficiary of Middle Eastern defence and AI buildouts.
The rally followed a volatile stretch: despite beating earnings and “eviscerating” (Palantir’s own words) revenue expectations on May 5th, shares dropped 12 per cent.
As is normal with Palantir, investors bought the dip. Consequently, an expensive stock has become even more expensive. Trading on more than 100 times revenues, Palantir’s valuation is “irrational”, says Jefferies. Citi says it is “priced for beyond perfection”.
Just seven of 27 analysts covering Palantir have a buy or overweight rating.
Karp, ever the outlier, remains as polarising as his company. His recent shareholder letter scorned critics as risk-averse “cynics” who “will be swept aside”. He recently cancelled an interview with the Economist due to its review of a book he co-authored.
“The man we named the best CEO of 2024 can be thin-skinned,” the magazine noted. Indeed, but excited investors don’t care – not while the stock keeps climbing.
