Analysts Respond to Palantir’s S&P 500 Entry

So did he or didn’t he?

Stories that Palantir Technologies (PLTR) they helped locate Osama bin Laden has been circulating for some time.

Related: Three hot stocks — one a surprise — will join the S&P 500

In the book “The Finish,” which details the killing of bin Laden, author Mark Bowden wrote that Palantir’s software “actually deserves the popular moniker Killer App.”

The company’s data analytics technology also helped track down Mexican drug cartel members who killed a U.S. customs agent and tracked down hackers who were installing spyware on the Dalai Lama’s computer.

General David Petraeus, CIA director 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 “pure and brilliant “.

But about bin Laden…?

When 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 don’t— you will never meet the pope again”.

He added that without Palantir’s software, “you would have already had massive terrorist attacks in Europe, like the style of October 7,” referring to Hamas attacks on Israel.

Palantir Technologies CEO Alex Karp during a Bloomberg Technology television interview during the FoundryCon event in Palo Alto, Calif., Thursday, March 7, 2024. Photographer: David Paul Morris/Bloomberg via Getty Images

Bloomberg/Getty Images

Palantir posts record profit

It’s a good time to be at Palantir.

The Denver-based data analytics company, which has only traded publicly for the past four years, saw its shares jump about 12 percent on Sept. 9 on news that the group would be added to the S&P 500.

S&P Dow Jones Indices said Palantir, Dell Technologies (della) and Erie Indemnity (ERA) would join the broadest list of top US stocks on September 23. American Airlines (AAL) Etsy (ETSY) and Bio-Rad Laboratories (BIO) will join the S&P 400 mid-cap index.

Related: Palantir shares rise on huge S&P 500 decision

Founded in 2003 by Karp, billionaire investor Peter Thiel and Stephen Cohen, the company’s name comes from the “seeing stones” in JRR Tolkien’s The Lord of the Rings. These were indestructible crystal balls used for communication and to see events from other parts of the world.

“We were founded in 2003 and began building software for the United States intelligence community to assist in counterterrorism investigations and operations,” the company said in a regulatory filing.

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“We subsequently began working with commercial enterprises, which often faced fundamentally similar challenges in working with data,” the filing states.

Critics have complained about Palantir’s work at the border, which has helped U.S. Immigration and Customs Enforcement track undocumented migrants for deportation.

In 2019, about 70 demonstrators blocked access to the cafeteria outside the office in Palo Alto, chanting “Immigrants are welcome here, it’s time to cancel Palantir.”

In addition, Thiel is endorsing former President Donald Trump in the November election, and Karp said he told the billionaire that “this doesn’t make our lives any easier.”

Palantir, which does not do business with China, Russia or other countries opposed to the West, posted a record quarterly profit last month. Sales rose 27%, driven in part by growing demand for its AIP Logic platform, which tests and improves AI-related strategies.

The veteran investor “pounding the table” for Palantir

Karp said in his letter to shareholders that “every part of our organization is focused on launching AIP, which went from prototype to product in a matter of months.”

The demand for large language models from commercial institutions in the US, he said, “continues to be unabated.” LLMs are models, trained on data, that can understand and generate language and perform tasks.

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“This is a very important moment for Palantir because we’ve proven to the world that what we’re doing is quantifiable and real,” Karp told analysts during the company’s earnings call. “We’re focused on growing this company to be much more impactful, much bigger and much more valuable.”

“We know that many of you also support us because you realize that we are aligned with your values, which means fighting to make the West a stronger and better place, including on the battlefield,” he added.

Among those strongly backing the company is TheStreet Pro’s Stephen Guilfoyle.

“We’ve been pushing for Palantir for quite some time,” he said. “The ‘Stocks Under $10’ portfolio has long been stocks with a single-digit net basis. Once that product has been terminated as a stand-alone offering. and I was allowed to hold 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 looking forward to over the past year because the profitability profile of this story has been significantly strengthened by this, another moment of validation for the Palantir story. “

“We believe many Palantir skeptics have underestimated Palantir’s profitability and cash flow potential with its AI Platform and US commercial business a primary driver of its business model going forward,” he said.

AIP has been able to show customers how to work through specific tasks that require Al and allow it to propose and take real-world action as well, said Ives, which maintained its outperform rating and price target of $38 for shares.

The analyst said it’s also likely to drive a multi-year deal cycle as more companies look for Al capabilities that deliver value and innovation, something Palantir’s AlP can help with.

“In short, the addition to the S&P 500 is an important moment in the Palantir story, which we believe marks a new era of growth and profitability for the enterprise over the next several years,” Ives said.

Related: Veteran fund manager sees world of pain coming for stocks