Key Points:

• Palantir, originally focused on government data, is now expanding into AI and other sectors, driving recent stock gains.
• Earnings jumped 27%, with AI hype boosting its valuation.
• The company is diversifying beyond government contracts, aiming for further growth.
• Investors are wondering if Palantir could be ‘The Next Nvidia’. Decide for yourself and read this report

Douglas and Lee discuss Palantir (NYSE: PLTR), a company originally focused on data collection for the U.S. government, particularly in defense. Palantir has since expanded its reach to other governments and is now publicly traded, though much of its business remains tied to the military. The discussion highlights how Palantir is transitioning from being a big data company to incorporating AI, which has significantly boosted its stock value. Despite early struggles post-IPO, Palantir’s stock has surged this year, particularly due to its association with AI. Douglas and Lee express optimism about Palantir’s future, especially as it diversifies beyond government contracts and capitalizes on the AI boom. They agree to revisit the company’s progress after the next earnings report.

Transcript:

Now, this is a fascinating company, Palantir.

Palantir basically did work for the U.S. government, collecting all of their data.

And it was used by places like the Defense Department.

But you could almost describe it as an arm of the government.

It was basically spun out and financed by people like Peter Thiel.

So it is now a publicly traded company.

However, most of their business still lies within sort of the military complex.

It’s no longer just in the United States.

It’s now many other governments around the world.

The trick for Palantir has been to get outside this big data for the government to AI-based analysis and collection of big data for everybody else in the world who can afford them.

Right, so they were just sort of a big collection data company.

And then, aha, well, somebody said, well, they’re an AI company too.

They have to be.

They can’t, you can’t collect all that data without…

I’m surprised they didn’t put AI on the end of their name.

Has to be Palantir AI, right?

Now, tell me what’s happening with the stock now that we know that as a background.

How has this played out in the last few months?

This year, the stock’s been outstanding after really a pretty slow start from the IPO.

And earnings for this last quarter were up 27%, you know, way above analyst estimates.

And I think, you know, Thiel’s a genius.

And they’ve got an interesting collection of people that were the founders of Palantir.

You know, they’re Silicon Valley guys, but, you know, there’s other guys that are not your typical Silicon Valley VC guys.

And I think that’s proven to be an interesting combo at the top.

Well, yeah, it’s fascinating because they really were serving the US government, particularly in things like defense.

Now, this shouldn’t affect the stock per se, but there were a lot of people who objected to investing in this company because they felt it was, you know, sort of involved with a lot of stuff with the government that the government was using in defense and it was using in things that had to do with, you know, violence overseas.

But I think for investors, it’s sort of like, it’s like Altria, if you don’t mind that they sell cigarettes, it’s one of the great investments you can make.

So absolutely, this is what I suspect is going to happen with Palantir.

Their government business is never going to go away.

Never.

They are going to have more and more success moving into what I would call the industrial side of the military industrial complex that Dwight Eisenhower named.

So they get more and more business that comes from outside the government, which investors like.

They view it as diversification and a more stable revenue base.

And finally, they are now one of these companies that has gotten the pixie dust of AI.

Their valuation is now being driven as much by AI as it is, you know, you and I would describe as the normal metrics of their earnings.

So I like this company because as long as the market is taking the AI bait, this thing gets driven north with a lot of other companies like NVIDIA that, you know, where people believe that AI solves all the world’s problems and is going to get bigger and bigger to the point where it’s the, the, the revenue from AI in the world is more than the world’s GDP.

So I like that on here.

I think you’re right about them trying to spread out the business to the people that are the biggest winners in defense.

And that’s companies like Lockheed and Northrop Grumman and companies like that.

I mean, Lockheed is the major government military supplier and vendor.

And you can only bet the kind of money that they would like to save so they can keep getting those huge contracts.

And yeah, and Thiel’s, I mean, it’s a really, really smart company and really didn’t do anything except trade sideways for the first two years after the IPO.

The only move higher has been in the last year.

And if it breaks out of this kind of trading range, which it’s starting to do, who knows what the upside could be?

Yeah, it could look like a genuine AI favored stock.

Yeah, I think so as well.

And again, I think for people looking for a good idea now, any of our viewers are like scrambling to find something in what has just been a nonstop bull market.

Maybe this is a good place to look.

I don’t disagree.

So we’ll come back to Palantir after their next earnings.

Yeah, let’s do it.

Good.

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