Analysts respond to Palantir's entry into the S&P 500
So did it or didn't it?
Stories that Palantir Technologies (PLTR) helped locate Osama bin Laden have been circulating for quite a while.
In the book "The Finish," detailing the killing of bin Laden, author Mark Bowden wrote that Palantir's software “actually deserves the popular designation Killer App.”
The data-analytics company's tech also helped locate Mexican drug cartel members who murdered an American customs agent, and it tracked down hackers who installed spyware on the computer of the Dalai Lama.
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Gen. David Petraeus, director of the CIA under President Barack Obama, described Palantir to Forbes in 2013 as "a better mousetrap when a better mousetrap was needed" and CEO Alex Karp as "sheer brilliant."
But about bin Laden...?
When the New York Times columnist Maureen Dowd asked Karp whether the company had indeed played a role in locating the architect of the 9/11 attacks, he said that “if you have a reputation for talking about what the pope says when you meet him, you’ll never meet the pope again.”
He added that without Palantir's software, “you would’ve had massive terror attacks in Europe already, like Oct. 7 style," referring to the Hamas attacks on Israel.
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Palantir posts record profit
This is a good time to be Palantir.
The Denver data-analytics company, which has been trading publicly only for the past four years, saw its stock surge some 12% on Sept. 9 on news that the group will be added to the S&P 500.
S&P Dow Jones Indices said Palantir, Dell Technologies (DELL) and Erie Indemnity (ERIE) would join the broadest list of U.S. blue-chip shares on Sept. 23. American Airlines (AAL) , Etsy (ETSY) and Bio-Rad Laboratories (BIO) will join the mid-cap S&P 400 index.
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Founded in 2003 by Karp, billionaire investor Peter Thiel, and Stephen Cohen, the company's name comes from the “seeing stones” in J.R.R. Tolkien’s "Lord of the Rings." These were indestructible balls of crystal used for communication and to see events in other parts of the world.
"We were founded in 2003 and started building software for the intelligence community in the United States to assist in counterterrorism investigations and operations," the company said in a regulatory filing.
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"We later began working with commercial enterprises, who often faced fundamentally similar challenges in working with data," the filing said.
Critics have complained about Palantir’s work at the border, which helped U.S. Immigration and Customs Enforcement track down undocumented migrants for deportation.
In 2019, about 70 demonstrators blocked access to the cafeteria outside the Palo Alto office, shouting “Immigrants are welcome here, time to cancel Palantir.”
In addition, Thiel is backing former President Donald Trump in the November election, and Karp said he told the billionaire "this is not making our life easier."
Palantir, which does not do business with China, Russia or other countries that oppose the West, posted record quarterly profit last month. Sales rose 27% thanks in part to surging demand for its AIP Logic platform, which tests and improves AI-related strategies.
Investing veteran 'banging the table' for Palantir
Karp said in his letter to shareholders that "every part of our organization is focused on the rollout of AIP, which has gone from a prototype to a product in months."
The demand for large language models from commercial institutions in the U.S., he said, "continues to be unrelenting." LLMs are models, trained on data, that can understand and generate language and perform tasks.
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"This is a super important time for Palantir because we have proven to the world that what we do is quantifiable and real," Karp told analysts during the company's earnings call. "We are focused on growing this company to be much more impactful, much larger, and much more valuable."
"We know that many of you also support us because you realize that we are value-aligned with your values, which means fighting to make the West a stronger and better place, including on the battlefield," he added.
Among those staunchly supporting the company is TheStreet Pro's Stephen Guilfoyle.
"I have been pounding the table for Palantir for quite some time," he said "The 'Stocks Under $10' portfolio was long the shares with a mid-single-digits net basis. Once that product was terminated as a stand-alone offering and I was allowed to own the shares of portfolio stocks in my own accounts, PLTR was the first name I bought for myself, with a $16 handle."
Wedbush's Dan Ives on Palantir
Wedbush analyst Dan Ives said the company's addition to the S&P 500 is a moment that Palantir investors "have been anxiously waiting for over the past year as the profitability profile of this story has significantly been bolstered with this, another validation moment for the Palantir story."
"We believe many skeptics of Palantir have underestimated the profitability and cash flow potential of Palantir with Artificial Intelligence Platform and the US commercial business a core driver of the business model going forward," he said.
AIP has been able to show its customers how to work through specific tasks that require Al and enable it to propose and undertake real-world actions as well, said Ives, who maintained his outperform rating and $38 price target on the shares.
The analyst said it's also likely to spur a multiyear cycle for deals, as more companies seek out Al capabilities that provide value and innovation, something Palantir's AlP can help with.
"In a nutshell, getting added to the S&P 500 Index is an important moment in the Palantir story that we believe marks a new era of enterprise growth and profitability over the next few years," Ives said.
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