Palantir: Between Success and the Risk of a Bubble

Palantir, a leading company in the field of AI software, is currently on the brink of a potential stock bubble. Despite flourishing business, the high expectations of investors cannot be aligned with reality. Historical examples show that similar situations rarely end well for investors. The success of Palantir is undeniable. Their software enables users to make informed decisions, benefiting both governments and commercial enterprises. The outstanding product, the Artificial Intelligence Platform (AIP), integrates AI models into business processes and thus stands out significantly. However, it is bold to call Palantir the equivalent of Nvidia in the software industry, as the competition in this area is considerably greater. Nvidia has set itself apart from the competition through its unique position in the performance sector. Palantir, on the other hand, faces strong competition—from companies with pre-fabricated AI models as well as consulting firms and individual developers offering their own solutions. Palantir’s business has been successful so far, but due to the high cost of bespoke software, the potential customer base is limited. With revenues of 179 million dollars and 321 U.S. customers in the third quarter, the average revenue per customer is 2.23 million dollars. This excludes many small and medium-sized enterprises. Criticism of Palantir is misplaced, as not every company requires the specialized software, while products like Nvidia’s GPUs can be used much more universally. Nevertheless, the current stock price reflects an exaggerated assumption that Palantir’s software would be used by all companies worldwide. With a revenue increase of 30% in the third quarter compared to the previous year, Palantir certainly shows strong growth, but it is not enough to justify the current stock valuation.