It is run by an eccentric philosopher, delivered Covid vaccines and helped catch Osama Bin Laden and fraudster Bernie Madoff. Stocks have surprised Wall Street since Trump won the election.
Our investment guru Anne Ashworth asks if UK retail investors should join The 3,000 percent increase in Palantir’s stock price.
Palantir Technologies used to be a household name only among the defense departments and intelligence communities in Washington and Whitehall.
But now this $147 billion US software group is being talked about as the next tech superstar.
The fast-growing company, based in Pal Alto, California, is being talked about in the same breath as chip designer Nvidia, valued at $3.5 trillion, the technological marvel of the year so far.
Nvidia leads the semiconductor sector. Palantir specializes in sophisticated analysis of data from multiple sources, which is crucial in modern warfare, but also has broader applications.
Palantir specializes in sophisticated analysis of data from multiple sources, which is crucial in modern warfare, but also has broader applications.
The United States government is its largest client. Its technology was used to administer Covid vaccines, convict fraudster Madoff and oust Al-Qaeda kingpin Bin Laden. In the UK, it is best known for the controversial adoption of its data platform in the NHS, with the aim of improving efficiency.
Palantir, which I would prefer not to talk about given the confidential nature of its contracts with the US and UK governments, has been put in the spotlight due to the 274% jump in its share price this year .
Stocks soared following Donald Trump’s election to the White House, based on investor sentiment that he will be a big beneficiary of increased national security spending, along with a crackdown on immigration.
Its shares are now about 3,000 percent above their level a decade ago.
To some, the company’s valuation appears dangerously high. But others believe Palantir could go even further, as it is considered a major “Trump business.”
The company, founded in 2003, is named after palantiri, the magical “seeing stones” in JR Tolkein’s The Lord of the Rings.
That’s an apt name, because the company is a 21st-century wizard in the dark art of big data collection and analysis.
In the weeks after the US election, its shares rose 54% to $63, with hopes of learning how its technology can be deployed in the future, in everything from counterterrorism to healthcare. .
At its inception, Palantir’s goal was “to reduce terrorism while preserving civil liberties.”
Now Palantir has ambitions beyond this planet. This is a partnership to supply the commercial low-Earth orbit space station Starlab, a joint venture between the US company Voyager and Airbus.
Anne Ashworth asks if UK retail investors should join Palantir’s share price rise
Back on this planet, Palantir reserves its expertise strictly for Western nations, a commitment that is key to its status as a “Trump commerce.”
It has gained even more shine because its executives include prominent Trump allies.
Billionaire businessman Peter Thiel is one of the founders of Palantir and its second largest shareholder. Thiel financed the entry into politics of Vice President-elect JD Vance, for whom he has acted as a mentor.
Thiel, or so it is claimed, convinced Trump to choose Vance as his running mate.
Thiel’s private life is a staple of Hollywood gossip magazines.
There is much speculation about the father of two’s relationships outside of his marriage to his husband, financier Matt Danzeisen.
His views on other issues are also surprising: for example, he has advocated the establishment of the Enhanced Games in which competitors take every possible performance-enhancing drug.
These notions attract an additional level of publicity because Thiel, 57, belongs to the ‘Paypal mafia’, the powerful gang that created the payments platform in 1998.
Other members of this select fraternity include billionaire Elon Musk, who is taking a central role in the Trump administration as efficiency czar, assuming an almost vice-presidential degree of power.
Have Thiel and Musk always gotten along? No. But was the alliance of these conservative libertarians key to winning the support of tech bosses and Silicon Valley billionaires for the Republicans? Yeah.
Trump is seeking to cut government spending on almost everything except defense, which is Palantir’s core competition.
Its Gotham division handles the defense and intelligence departments, while the Palantir division serves the private sector, where its clients include Ferrari, Fiat Chrysler, Merck and Morgan Stanley.
In Britain there is controversy over Palantir’s relations with the Ministry of Defense and the NHS. The concern revolves around how much personal information about Brits Palantir could obtain from its £330m data systems contract with the NHS. This week it emerged that Labor peer Tom Watson had joined Palantir’s UK arm as an adviser. Watson, a former deputy chief, has been a strong advocate for privacy.
But controversy surrounds almost every aspect of the group, from its founders and bosses to the nature of its operations, which are at the center of the industrial revolution that is sparking ChatGPT and other generative AI software models.
The speed of the US government’s adoption of AI fueled a 30 percent rebound in the company’s third-quarter revenue.
Brokers like T Rowe Price say Palantir is particularly adept at integrating data and generative AI to get the best results.
Palantir now expects revenue for all of 2024 to be between $2.8 billion and $2.9 billion, a result that would surely delight its big investors on Wall Street and the City, including fund manager Vanguard.
Revealing the third quarter numbers, Palantir CEO Alex Karp stated, “We absolutely gutted this quarter, driven by relentless demand for AI that won’t let up.”
Karp, who founded Palantir with fellow Stanford Law student Thiel, is considered almost as eccentric as the latter.
This may be due, in part, to a very revealing New York Times interview in which Karp described himself as “a Jewish, racially ambiguous dyslexic.”
This 57-year-old man has never learned to drive, he doesn’t like having his own things and he surrounds himself with bodyguards. His middle name is Caedmon, after a 7th-century Anglo-Saxon shepherd and poet who tended cattle at Whitby Abbey and learned to compose verses in a dream.
He sees himself more as a philosopher than a tech expert, and he’s also a Democrat.
However, Karp takes a strong stance on national security and follows the motto: “You scare your adversaries.”
‘Without being Pollyannaish, idiotic, or pretending that any country has been perfect or that there is no injustice, at the margin, would you want a world where America is stronger, healthier, and more powerful, or not?’ is one of his rhetorical questions.
Karp has an equally strong opinion about investors who shorted Palantir shares earlier this year, betting its price will fall.
He simply observed that he loves to “burn” those who fall short of their stock.
“Almost nothing makes a human being happier than taking cocaine lines away from these short sellers, who are shorting a really big American company, not just ours; they just love taking down big American companies so they can pay their bills.” coca”. .’
“And the best thing that can happen to them is that we will provide them – we will guide their coke dealers – to their homes, when they can’t pay their bills.”
Whether or not they are now under siege by angry drug dealers who want to get paid, anyone who went short on Palantir earlier this year almost certainly lost money.
But some analysts warn that anyone who jumps on board now could face a dangerous journey, arguing that stocks have risen too much, too fast.
Brent Thill of broker Jefferies questions whether growth estimates of 26 percent this year and 24 percent in 2025 are achievable.
This doubt appears to be behind the decision by hedge funds, such as Ken Griffin’s Citadel, to sell their stakes in Palantir this year.
Instead, some funds committed the cash to Nvidia. Most UK fund managers have not yet taken stakes in the company, perhaps because it only joined the S&P 500 index in September.
This caution about Palantir’s prospects is reflected in analyst opinions: Eight of the companies, including Goldman Sachs, that follow the stock rate the stock as a “Hold.”
Three firms rate the stock a “buy,” perhaps believing the company’s move to the tech-heavy Nasdaq index on Nov. 26 will provide a boost. Exchange-traded funds (ETFs) that track this index will be forced to buy the stock.
Prior to this move, Dan Ives of brokerage Wedbush raised his stock price target to $75. Bank of America’s Mariana Pérez has set the same goal, arguing that “Palantir is poised to dominate as companies turn to software and artificial intelligence to increase their margins, rather than trying to achieve scale by investing in assets.” fixed”.
US retail investors seem to believe that Palantir will deliver the ‘tendies’ (online slang for share price gains).
UK investors may already have exposure to the AI revolution through stocks like Nvidia and Microsoft. Palantir could be an addition, as long as you can afford to watch and wait.
how to buy
You can buy and sell shares through online investment platforms such as AJ Bell, Bestinvest, Hargreaves Lansdown and Interactive Investor.
If you want to bet on an increase in defense spending, Palantir is the largest holding in the Han Future of Defense ETF. This fund invests money in companies that generate income from defense and cyber defense spending by NATO and NATO+ allied nations. The fund also has a stake in BAE Systems, the British group.
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