Why Palantir’s success will outlast AI exuberance

Subscribe to enjoy similar stories. Despite what Alex Karp, the boss of Palantir, says, investors are hardly “batshit crazy" to bet against his company. The seller of whizzy analytics tools has a market value of nearly $450bn, equivalent to 137 times its sales over the past 12 months and 624 times its net profit.

Nvidia, the most valuable company in the world and a fellow beneficiary of the artificial-intelligence (AI) boom, is worth a comparatively meagre 28 times its sales and 54 times its net profit. Palantir, whose customers range from America’s Central Intelligence Agency to Wendy’s, a fast-food-chain, bears many of the hallmarks of an overinflated meme stock. It is beloved of retail investors, some of whom wear “Palantir to the moon" T-shirts.

The company, which loudly celebrates America’s military might, is also gleefully polarising. This week Mr Karp, who previously sat on the board of The Economist’s parent company, berated “the chattering class" for failing to grasp Palantir’s potential. In a letter accompanying its latest quarterly results, published on November 3rd, he wrote that Palantir’s doubters were in a “kind of deranged and self-destructive befuddlement".

And yet the ranks of the befuddled seem to be swelling. The day after Palantir unveiled results its shares plunged by 8% as it was revealed that Michael Burry, an investor famed for his bet against subprime mortgages during the global financial crisis of 2007-09, had taken out a big position against the company. If the hype surrounding AI fades, Palantir’s stock will have a lot further to fall.

Even if that happens, however, Palantir’s business will survive. It is going from strength to strength. Revenue in the quarter from July to September was up by