To The Moon

While the market swoons over AI, Palantir leans into strategy, not spectacle.

Palantir is either the poster child for AI euphoria or the patient architect of a data-driven empire. With a \$293 billion valuation and a price-to-earnings ratio north of 650, it certainly tests the bounds of investor imagination. But behind the lofty figures lies a business that’s more grounded than many assume. As a long-term investor, I’m less interested in narrative than in durability—and Palantir’s durability is quietly becoming its most underrated trait.

At the core of its strength lies a relationship that’s both exclusive and reliable: the US government. From military intelligence to disease modelling, Palantir’s software is embedded in critical federal infrastructure. These long-standing contracts aren’t just lucrative—they’re defensible. Government revenue provides a stabilising anchor amid market cycles, and unlike volatile consumer demand, defence spending rarely retreats. In the most recent twelve months, $Palantir Technologies Inc.(PLTR)$ generated \$2.87 billion in revenue—modest by big tech standards, but consistent. That consistency matters when macro conditions turn choppy.

Where defence roots meet the future of artificial intelligence

AIP Is the Main Course Now

Yet it’s not the public sector alone that intrigues me. Palantir’s commercial business, turbocharged by its Artificial Intelligence Platform (AIP), is no longer a side dish—it’s starting to look like the main course. From healthcare to manufacturing, clients are deploying AIP to optimise everything from drug discovery to supply chains.

This isn’t generic software—it’s highly tailored, deeply integrated, and often irreplaceable. That makes Palantir far stickier than the average SaaS play. It’s telling that the company uses a 'boot camp' model: send in engineers, embed deeply with the client, and customise solutions at the source. It’s not cheap, but the resulting switching costs are immense. Once you’ve rewired your operations around Palantir, walking away becomes nearly impossible.

The Underrated Data Flywheel

What’s even more interesting—though rarely discussed—is how this model creates something of a data flywheel. Each new deployment yields more training data, which feeds into better AI models, which in turn make the platform more effective for future clients. In a world increasingly driven by proprietary datasets, $Palantir Technologies Inc.(PLTR)$ isn’t just building software—it’s amassing a competitive moat built from intelligence itself.

Palantir's total return leaves the S\&P 500 trailing far behind

Can Earnings Catch the Hype?

Still, the elephant in the war room is valuation. With a trailing P/E ratio of 654 and a forward P/E of 222, Palantir makes $NVIDIA(NVDA)$ look like a bargain bin stock. That sort of premium demands near-flawless execution. While the company is profitable—with a 16.13% profit margin and \$924.91 million in free cash flow—it’s not yet earning at a scale that supports its near-\$300 billion market cap. The price-to-sales ratio of 99.38 is astronomical by any historical standard.

So can its earnings justify this price? Not today. But possibly tomorrow. The bet is that as AIP adoption accelerates and margins scale, today’s speculative pricing becomes tomorrow’s strategic discount. The PEG ratio, sitting at 4.27, hints that growth expectations are rich—but not entirely delusional. If $Palantir Technologies Inc.(PLTR)$ can maintain 40–50% annual growth in its commercial business while keeping costs under control, its earnings could eventually catch up with its multiple. It won’t happen in a quarter—or even a year—but in five years, I wouldn’t rule it out.

Political Winds and Palantir’s Alignment

There’s also the political wildcard to consider. A potential Trump administration in 2025 could be a boon for Palantir. The company’s alignment with conservative defence priorities, immigration analytics, and national security initiatives could lead to expanded federal contracts. Unlike many Silicon Valley darlings, Palantir doesn’t shy away from hard power. In a more militarised or surveillance-heavy government stance, its software is likely to become even more indispensable.

Conviction, Not Just Code

Here’s something most investors don’t fully appreciate: Palantir’s clients aren’t just buying software—they’re buying conviction. The company has a polarising, borderline zealous culture, but that ideology is precisely what attracts mission-critical institutions. When you’re making decisions that involve lives, sovereignty, or billions in capital, you don’t want a vendor—you want a partner with skin in the game. That’s a dynamic most AI startups can’t replicate.

Final Word: I’m Not In—Yet

Still, caution is warranted. The stock has run over 450% in the past year alone. Momentum like that is intoxicating, but also fragile. And with a beta of 2.74, this is not a stock for the faint-hearted. Any earnings miss, growth slowdown, or regulatory hiccup could trigger a sharp drawdown.

So where do I stand? I hold a healthy position in $Palantir Technologies Inc.(PLTR)$—and I intend to keep it. This isn’t a momentum trade for me. It’s a long-term conviction in a company that’s steadily building real-world moats while the rest of the AI space chases headlines. If commercial momentum continues and the valuation gradually finds firmer footing, I wouldn’t just hold—I’d consider adding. Palantir isn’t flying blind—it’s flying tactically. And that, in this market, is a rare discipline.

Not a straight line, but a singular path upward

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