QV Alert – Palantir Technologies Makes AI Happen

I was going to do the Nasdaq Composite as an alert. On this long-term chart, we can see a breakout, which could have much further to go. Also, there is a moving average buy signal, and they have worked well in the past.

Palantir Technologies is led by an unusual man called Alex Karp. Below is a sample of his comments at the latest meeting with analysts.

Given how strong our results are, I almost feel like we should just go home. But we’ve been saying since we went public in a DPO that we would build infrastructure to make America and its allies a dominant force in the world. We claimed, to much skepticism, that this would be done in the software product; that defense and commercial industry would be driven by software, hardware, hybrid technologies; that there were very few companies in the world that could actually do that; that these companies are basically only built in America; that the companies that have tried to do this that aren’t Palantir are built by ex-Palantirians; that the financials of Palantir would flow from our products and our culture and our way of implementing; that we would bring violence and death to our enemies while making targeting and general issues of safety better for our allies and for Americans; that we would stand by our values in thick and thin, including that the West and America are superior ways of organising and that this is a great country and historically anomalous in its greatness; and that we would build a company with the best people from all over the world, but primarily from America, to power America and its allies. And even we are shocked by the 44pc growth in the U.S. off of a $2bn base. So, this is not some speculative small base, 44pc growth. Even we are happy to see that we grew 30pc, to see the reacceleration in USG to 40pc, and to see the very, very strong results in U.S. commercial; also, allied countries that have begun to realize that AI is the way in which to make their defenses superior in the face of brutal, heinous, immoral and often terroristic enemies, where you need a superior form of fighting that’s both safer for you and more dangerous for the adversary and controls how you hit them and when and where and allows you to maximise your results.

[Unlike IPOs, DPOs aren’t backed by underwriters or other intermediaries, which are often big Wall Street banks. DPOs date as far back as the 1980s, but they gained popularity in 2020 when the U.S. Securities and Exchange Commission (SEC) gave the New York Stock Exchange (NYSE) approval for direct listings.]

Alex Karp, CEO, Palantir Technologies, Q3 2024, 4 November 2024

As you can imagine he is very much my kind of guy but then I love John Wayne movies.

Palantir is not all about defence; the smaller commercial side (companies rather than governments) is growing even faster but their defence business is remarkable.

It was our strongest sequential growth in 15 quarters driven largely by our DoD business’ 21pc quarter-over-quarter growth. We remain proud of our progress delivering the next-generation targeting node through TITAN, with our efforts fully ramping throughout Q3. Palantir is also delivering AI through Maven Smart System, allowing customers like the 18th Airborne to match the performance of what used to be a 2,000-staff targeting cell during Operation Iraqi Freedom to a targeting cell of roughly only 20 people today. Last quarter, Palantir signed a new five-year contract to expand these Maven Smart System AI/ML capabilities across the U.S.

[The Department of Defense (DoD) is the United States federal government’s executive branch department that manages the military and national security. The DoD’s mission is to protect the country’s security and deter war by providing the necessary military forces. The DoD is headquartered at the Pentagon in Arlington County, Virginia. The DoD is the world’s second largest employer, with over 2.91m employees, including: over 1.4m active-duty service personnel, over 778,000 National Guard and reservists, and over 747,000 civilians.]

Ryan Taylor, chief revenue officer, Palantir Technologies, Q3 2024, 4 November 2024

One theory is that Donald Trump as president and Elon Musk making public spending more efficient will dramatically increase the reliance on technology provided by companies like Palantir.

Palantir is by no means just about defence.

Our results are exceptionally strong. Revenue grew 30pc year over year in Q3 driven by an intensifying AI revolution that the U.S. is rapidly driving. Our U.S. business achieved 44pc year over year and 14pc sequential revenue growth. We are focused on deploying AI models in production amid the commoditisation of cognition caused by the rapid advancement in AI models. Our U.S. government business revenue growth accelerated to 40pc year over year and 15pc sequentially, while our U.S. commercial business momentum continued with 54pc year over year and 13pc sequential revenue growth. This AI revolution that is transforming industry as well as government is also transforming markets. In September, the S&P 500 added Palantir to its index, a testament to our exceptional growth, profitability, and market leadership amid the singular era of accelerating technological progress. We’re witnessing the commoditisation of cognition with the rapid advancement of AI models.

Almost all investment in the AI space has been focused on supplying and improving these models. What will differentiate the AI haves from the have-nots is the ability to maximally leverage these models in production by capitalising upon the rich context within the enterprise. This is Palantir’s focus. We see this in the results we’re delivering for our customers.

Those who embrace quantified exceptionalism through AIP [artificial intelligence platform] are able to take advantage of the commoditised cognition in a levered way to advance their differentiation. In this winner-take-all AI economy, the divide is widening between those who are leveraging AIP and those who are not. At a leading global insurance organisation, AIP has helped automate key underwriting workflows, reducing the typical underwriting response time from over two weeks to three hours. We implemented over 10 business use cases in just nine months at Associated Materials, increasing its on-time in-full delivery rates from 40pc to 90pc.

At Trinity Rail, it took just three months to get to a functional workflow with a $30m impact to its bottom line. Last quarter, we closed 104 deals over $1m. The evolving deal cycle as we take customers from prototype to production is having a particularly phenomenal effect on the growth of our U.S. commercial business, which continues to see AIP-driven momentum both in expansions and new customer acquisitions.

Ryan Taylor, chief revenue officer, Palantir Technologies, Q3 2024, 4 November 2024

It is obvious that Palantir is an exciting company, arguably as exciting as other AI stars like Nvidia and well-placed for continuing explosive growth. The issue is the valuation but picking stocks on valuation never works. Great stocks always look super dear on spreadsheets. This is about believing the story, which is incredible.

One analyst with a great track record on picking the most exciting technology performers, Dan Ives, head of global research at Wedbush Securities, says it is not inconceivable that Palantir could become a trillion dollar stock; that is nearly seven times the current valuation and, very neatly, would take the share price to $1,000.

Share Recommendations (27 November 2024)

Palantir Technologies. PLTR

An exciting aspect of Palantir and other software companies is this concept of bootcamp.

What bootcamp means is that companies go in with their technology and show the client how it might help them. It is a powerful way of bringing their message and Palantir is achieving great results with the bootcamp approach.

What works in defence is also working commercially.

This is producing dramatic growth.

And just looking at what is happening to the commercial customer count.

It could hardly be more exciting.

The world is in the midst of a U.S.-driven AI revolution that is reshaping industries and economies, and we are at the centre of it.

Palantir Technologies, Letter to Shareholders, Q3 2024, 4 November 2024

Strategy – Ways To Buy Palantir

Palantir could be an interesting stock for a dollar cost-averaging strategy. Unless something unexpected goes wrong add to your position every month or every three months. Keep doing this forever and you could make a fortune.