The company specializing in the processing of masses of data has accumulated prestigious partnerships, from Snowflake to Nvidia, including the British and Polish governments. What justifies its stratospheric valuation?
One agreement after another, Palantir, the American specialist in mass data processing, is placing its pawns and expanding its ecosystem around AI. Its latest partner is not the least, since it is Nvidia. Together, the two companies, specialists in software and hardware respectively, intend to facilitate the adoption of AI by businesses and governments. Palantir’s application programming interface will notably integrate Nvidia’s libraries and models to offer a complete technological stack to corporate clients.
Last week, Palantir partnered with cloud data specialist Snowflake. By joining forces, the two players intend to enable their clients to build more efficient and reliable data pipelines, accelerate their analyzes and develop AI applications. “Combining the power of Palantir and Snowflake is a no-brainer, designed to reduce friction to make it easier for customers to deploy intelligent applications and accelerate value creation,” said Mike Gannon, chief revenue officer at Snowflake.
In September, Palantir also approached the United Kingdom government to put its algorithms at the service of the British army and to establish a new European headquarters dedicated to Defense in London. A similar agreement with the Polish Ministry of Defense was also signed.
The eye of the authorities
If its technology is very popular with organizations and governments wishing to deploy cutting-edge uses around AI, Palantir is not a loser of the year. The company was founded in 2003. The most famous of its co-founders is undoubtedly the investor Peter Thiel, who, like Elon Musk, comes from the PayPal Mafia, an experience which largely influenced the creation of Palantir.
Indeed, to better fight against fraud, PayPal had set up a system based on the analysis of large quantities of data to identify suspicious actions and thus support humans. After September 11, Peter Thiel had the idea of marketing this device to the American government, in order to better fight against terrorism. From its birth, the company has had a secret and sulphurous aura (in fact, it involves spying on Americans’ data), illustrated by the choice of its name, an evil artifact from the Lord of the Rings. In 2004, Alex Karp, a college friend of Peter Thiel, joined the company as general manager. A year later, the company attracted a big investment from the CIA.
Over the next two decades, Palantir strengthened its ties with the U.S. government and also established agreements with other allied defense forces. Unlike many of its Silicon Valley peers, who do business all over the world and display a certain political neutrality, Palantir puts forward a resolutely patriotic and civilizational argument and refuses to work with governments hostile to “Western values” like China or Russia.
“Software projects designed in partnership with our military and intelligence agencies, aimed at keeping us safe, have become controversial, while those built on advertising dollars are commonplace. For many digital companies, our thoughts, tastes, behaviors and browsing habits are products to be sold. A fact that the slogans and marketing campaigns of Silicon Valley’s biggest companies strive to forget,” says Alex Karp.
Its technology is used to track down Bin Laden and allows him to be spotted and then eliminated in 2011. It is also deployed by the American army in Afghanistan to help soldiers spot and thwart ambushes. During Covid, she helped the American government and the British NHS to monitor the evolution of the pandemic live, then to optimize the distribution of vaccines.
More controversially, it is also used by the Israeli military to strike Gaza, by the Los Angeles Police Department for predictive policing (a method of crime detection that some believe is biased against certain communities), and by the current administration to catch and deport undocumented immigrants. “Palantir’s mission is to make our partners the best in the world in their field, and, when necessary, to scare our enemies, sometimes even to kill them,” Alex Karp bluntly affirmed in an exchange with his investors earlier in the year.
Fruitful diversification at the service of businesses
But Palantir has also started to diversify its activities in recent years. In addition to its product dedicated to States, armies and police forces, called “Gotham” (a reference to the Batman universe), it offers a second product, Foundry, which aims to enable private companies to better organize, interpret and mobilize their data. It does not hesitate to deploy its engineers within client companies to supervise the implementation of its technology.
The company now includes big fish like Morgan Stanley, JP Morgan and Airbus. Palantir’s technology has enabled it to reduce the time needed to identify and resolve errors in its assembly lines by more than 25%, saving it millions of dollars. Here again, not all uses are so consensual: JP Morgan used a technology called Metropolis (since abandoned) to spy on its employees and identify, by cross-referencing the data, those who displayed weak signals of discontent, likely to reveal a desire to resign.
Diversifying into private companies allowed Palantir to successfully go public in 2020 and become profitable in 2022 after nearly 20 years of losses. She hasn’t been in the red since.
Stratospheric valuation riding the AI wave
But Palantir also benefited from the return of the Trump administration to the helm. Its co-founder, Peter Thiel, is a vocal supporter of the president (whom he had supported since 2016, unlike many of his peers) and the company has no fear of getting its hands dirty by accepting controversial government contracts. She received $30 million from the United States Immigration and Customs Enforcement to analyze the movements of migrants in real time. She also worked with Elon Musk on DOGE, landing a billion-dollar contract with the US Navy.
Wall Street took note. From $50 before Donald Trump’s re-election, Palantir’s share price is now close to $200. At a $450 billion valuation, the company is worth more than giants like Disney, IBM and American Airlines. For some, this valuation is totally fanciful. The Economist recently described Palantir as “the most overvalued company in history”.
“Palantir would need to achieve 30% growth over ten years to justify its current valuation,” estimates Christopher Clark, director of Definitum Search, a firm specializing in mergers, acquisitions and IPOs.
For others, it is justified by the central role that Palantir is already playing in the deployment of the AI wave, which is still in its infancy. Indeed, the solid foundations that the company has built for more than twenty years around the analysis of masses of data make it an ideal partner for the adoption of large language models. AI has become a major marketing argument for the company. “Palantir’s goal is to enable our customers to deploy AI to achieve immediate and dramatic results,” Alex Karp recently said. The contracts signed with several big names show that for the moment, they seem to have complete confidence in him.
