11AM Hour: Exclusive Interview with Palantir CEO Alex Karp 9/17/26

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0:37Good Thursday morning. Welcome back to Squawk on the Street. I'm Sarah Eisen with Carl Quintanilla, live from Post 9 of the New York Stock Exchange. Big show today. Joining us exclusively here at Post 9 in just a few minutes, Palantir co-founder and CEO Alex Karp will get his take on the mounting AI safety fears, calls for new guardrails, as well as the company's growth outlook and the latest geopolitical risk that he's monitoring. Easing worries about the Fed's inflation fight after the first rate hike in three years. We'll discuss it and the policy path with former Atlanta Fed President Bostick.

1:08And Canada's prime minister firing back at President Trump, saying nobody is going to dictate what Canadians do. We'll explain why. Got a solid open about an hour and a half ago, although the Dow's come off a little bit now, up to 12 S &P 7619, a little bit of relief in yields. We did have energy as the only sector down at the open, but they've been joined by financials and consumer staples down about half a percent. For more on the market, let's bring in our senior markets commentator, Mike Santoli, who's back watching some of this bounce here. Yeah, we got the typical backlash to the backlash, which was the opening rally in the market after the Fed sell-off.

1:43And we've been sitting on the S &P 500 right at yesterday's highs. So essentially right on the shelf of the levels that we went into the Fed decision with 76.25 or so. What it does do is it kind of returns the index to this range that's been in place since early August that market's been trying to hold. We tested below it. If the big concerns of this last phase of the sideways churn in the market had been, we might get further disorderly increases in oil prices and treasury yields, you've gotten that mitigated to some degree right now. The bond market action is interesting. So, you know, High four nines at this point.

2:22It's tolerable because we've been here recently. I think it was a mistake for people to think that you were going to get some huge treasury rally that was going to bring them back down to, let's say, under 4.8 or 4.75. I also don't know if you'd want to see that because that would be a radical flattening of the yield curve. It might suggest that further tightening would be a policy mistake. And so right now, I think you can kind of live with it, even if it leaves in place the questions. What does it mean for equity valuations? What's it implying about how fast inflation goes down? I don't think there's a ton of inflation in the 495.

2:57You know, I don't think that's mostly why it's been going up. So even if you say the Fed established more credibility on inflation fighting, it doesn't mean it's going to translate into big moves in the long end of the curve. Yeah, interesting. We do know that foreign ownership, nine-month low of U.S. Treasuries for the Chinese, 19-year low. Yeah. And then the basis trade was page one of the journal yesterday. Yeah, I mean, all of that builds together toward maybe we're seeing a crescendo in the worry about this. But the Chinese ownership is disguised like that's kind of a joke. It's sort of known they buy through other channels, so it doesn't look like their own ownership.

3:30But it's still true. I mean, obviously, this is and it's funny, you can also spin that as a net positive. Yep, we got huge structural deficits. And guess what? We mostly finance them ourselves. And therefore, when rates go up and interest expense at the federal government goes up, it actually goes into the pockets of wealthy people in the United States and institutions. I mean, it's kind of how it works. So the government keeps creating safe securities and income for people who live here. Just some of the magnitude of these moves in the AI name, the semiconductors on, you know, no news when there's a bounce back like this.

4:06It's pretty strong. It's amazing. Yeah. I mean, and I always say when you see those huge jumpy moves, it's the market having to travel farther to find somebody with conviction. Right. That's usually what it means. The prices. We don't have anybody at this price. Got to move it more. And I do think there is a general lack of conviction about what we can price in in terms of earnings trajectory and all the rest of it and what we're going to pay for these earnings. as we move along. It's hard to know how the AI safety questions are getting into this because I think we're going to build it on some level.

4:38People are saying even if you want more alignment, you're going to need more compute, not less. So I don't know that it matters for the hardware food chain in the short term. Intel's up like 10 % right now. What is? Intel. Yeah. Micron's up six. Yeah, I mean, there's definitely a flavor, by the way, in today's tape of like retail has been awakened because you got ARK up 4.5%, SpaceX, HUD, Tesla, the tokenization stuff. I do think there's a little bit of one of those. There you have it. That's all you need to know. Finally, one of the more interesting lines today out of J.P. Morgan and their commodities team.

5:14Did you see this? Yeah, yeah. For the first time since the start of the conflict in Iran, we don't have a baseline view. We simply don't know how to model the end game. Some are wondering what took them to hook anybody so long. Well, right. Exactly. Because you have had these sort of, you know, sobering moves relative to what consensus would have thought. And this latest phase has so much been about the refined products kind of completely in squeezed scarcity mode dragging crude prices up. It's not so much that people said, yeah, it's got to go to 110 to clear the market. It's much more about, you know, immediate scarcity and how we get through it.

5:49Yeah. Yeah. Today, Goldman looking at whether refiners should prioritize diesel over gasoline and all the rest. Thanks, Mike. As we continue to digest the rate hike yesterday, let's bring in former Atlanta Fed President Raphael Bostic, his first broadcast interview since leaving the role in February. Raphael, welcome back. It's great to have you again. Hi, Kyle. It's good to see you. I'm really glad to be here. Yes, we're grateful. Reflections on yesterday? Well, you know, when I think about the meeting, the decision was what I thought it should be. Inflation is way too high. Labor markets are strong and solid.

6:23And so that was not very difficult. And I think the decision was pretty straightforward. I was really more interested in the press cop to see if the chair was going to double down on the Jackson Hole speech. And that's largely what happened. I was pleased for that. And hopefully that will calm folks down and make it clear that the Fed is actually serious about getting inflation back to 2 percent. the price stability mandate is far more concerning than the employment mandate at this point. And the Fed's going to stay focused on that. But can they actually do anything about it? I get that they want to show that they're serious about it, but can they actually affect it if a lot of it is being driven by higher oil prices from the war?

7:06Well, I do think that expectations matter. And if the Fed is not positioned itself so that people believe that at some point down in the future, we're going to get to 2%, then you could see the pricing environment by a more out of control. And by and large, that has not happened, but it has not happened because the Fed has stayed focused on that. One question that I've been wrestling with for several years now is, how should we think about supply shock? The textbook story is that supply shock to not think that the Fed can deal with. You can look through it. It'll resolve itself. Historically, those resolutions have been quick.

7:47But what we're seeing now is increasingly the supply shock, they linger into the economy for a much longer time. And then that raised this question about whether you can afford to look through it. Right. But the problem is, on the other side, there are pockets of the economy where the Fed, you know, rate hikes will hurt mortgage rates, which do not need, you know, a rate hike. We know what's been going on in the housing market. It's been weak. There are credit places like autos, for instance, and others. And I guess I'm just wondering if there's potentially more harm than good that can come out of a rate hiking cycle right now.

8:27So I think the most harm would be if inflation stays high and people believe it's going to stay high. We've seen for several years now the number of families that are feeling stress by prices rise on a consistent basis. And I mean, you see this, I think, in part in consumer confidence numbers, which are at historic lows. If we don't create an environment or if the Fed does not create an environment where people believe that they're going to find some relief on these things, I think that's the bigger risk right now. Look, the labor market is quite... You don't really see that, though, in expectations.

9:05Inflation expectations have been really steady, haven't they? Well, they are until they're not. And I don't think you can ever assume that they're just going to always be that way. I think one of the things that I saw in my role at the Atlanta Fed was when I talked to people, people told me, I can be confident today because I know that you and your colleagues are serious about your mandate. If that message starts to weaken or dissipate, then I don't think it's a foregone conclusion that expectations will just stay where they are. Do you think wages in and of themselves are a credible tale at the moment?

9:43Basically, what I'm asking is whether or not they're being masked by other elements of comp, like health insurance for workers, that kind of thing. Well, look, I think that wages matter. And when a regular person goes to the grocery store, they know how much they've taken in their wage and they know how far it's going to take them for those things that they need to buy. So while you might have other parts of compensation that are important and helpful, I don't think it's in our interest to just look past wages because I do think that governs so much of how people interpret how the economy is working in real time.

10:22All right, here's a question because you're on the outside now, not on the inside anymore, so you can really spill the tea. The big question is whether they raise again in October, one week before the midterm elections. I know the Fed's independent, and they might not even say out loud that they don't want to do that ahead of the midterm elections. But that has to be going on in everybody's minds, right? That if we want to do one more hike this year, it should be in December because of the midterms? What do you think? I wouldn't put it like that. But what I would say is two things. So, one, this Fed has been quite patient over much of 2026.

10:56There was lots of discussion in July about whether they should move. There was lots of discussion in June whether they should move. And the patience was because there was this notion that perhaps some of the supply side things would dissipate, like the Iran war, which would take pressure off the prices. There was some belief at one point that labor markets were on the cusp of weakness and people wanted to see that. And so it wouldn't surprise me if we saw patience and just let things happen. The one thing I try to tell people all the time is that every meeting is a live meeting. And over the last four or five years, we have had so many surprises about what has happened.

11:35So this Iran war wasn't surprised, it wasn't on my list, the pandemic, for example. And so I don't think that I would not expect that any of my former colleagues are anchoring on one thing for sure or another. If the circumstances require it or demand it, I think that the Fed will do what it needs to do, even in that October meeting. And, you know, I say all the time, if you're going to be a central banker, you've got to get used to being yelled at. And I'm sure they'll take the heat. Rafael, it's good to have you back on the air. Please come back soon. I will come back whenever you want me. Rafael Bostic.

12:16Thank you. When we come back, Palantir CEO Alex Karp joins us exclusively. His first comments on the recent AI safety warnings and everything else this week. Squawk on the Street, we'll be right back. Legacy credit scores only look at a brief snapshot in time, and that limited view often leaves millions of qualified credit seekers out of the picture. Vantage Score is changing that by modernizing credit scoring. Vantage Score uses 400 % more credit and alternative data to create a fuller picture of financial behavior, including trended credit data, rental payments, and timely utility payments. Vantage Score safely broadens access to the credit economy and brings 5 million mortgage-ready borrowers into the market.

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13:38Be smart. Get Wise Business. Download the app. T's and C's apply. Ever notice how every new AI tool asks you to explain your business to it all over again? Google Workspace with Gemini skips that. You get Google's AI built right into the premium versions of Gmail, Docs, Sheets, and more. No new tools. No extra logins. Just one subscription that gives you personalized AI right inside your actual workflow. Make work less work. Try Google Workspace with Gemini at goo.gle slash workspace with Gemini. Welcome back to Squawk on the Street. Open AI disclosing six new instances of, quote, concerning behavior from its model over the past six months, just the latest in a slew of rogue AI hacks across several companies.

14:27It's a risk our next guest has been warning the tech industry about for months. His company writing in June, your AI sovereignty dictates your institution's future. Here with us now at Post 9 in a CNBC exclusive interview is Palantir co-founder and CEO Alex Karp. Welcome back. It's good to see you. I'm excited to be here. You know, I've been here many times with you. Yes. And you guys are tough, but among my favorites. Okay, well, thank you. We're excited to talk to you because this is a really important week, and there's been this explosion of AI safety warnings. Where do you stand on that? Well, okay, we've been in the forefront of using AI in the military context.

15:06It's the first company to build actually functional AI technology. as is currently well known. We're dominating the application space. We have a product. So there's a lot of, we have a lot of experience with like what works, what doesn't. There are really different kinds of safety issues, quite frankly. Almost all my, we dominate U.S. commercial as a company and the clients, our partners are livid at the kind of safety they're most upset about. What they believe is the theft of their alpha, meaning their ideas of how to run a business, their data, and landing in a model, and they find out that the competitor next door has all of their alpha, meaning how they do their business, and they paid for it.

15:48I mean, I can't repeat what the customers are saying, but they're basically like one to give you the one that was the least vulgar. It's like, but how can they tell me not to wear a condom? Like, this is, and that's the least vulgar person that we deal with. They're like livid. And so they're Delivided. So that's safety. Wait, can you just translate what you're talking about? So is this because of the LLM's fault? They're sharing data? No, no. The reason why the sovereignty revolution, which we helped launch together with our partner, Jensen Wong, the famous founder and head of NVIDIA, is that when you use a closed model and you pay for tokens, the reason the tokens are discounted is not so they can grow the market.

16:35They're discounted so that they can get access to your IP so that their models get better. And there was functionally no honest conversation about this or disclosure. Now, that's point one. Point two is without an application layer and without post-training, which is currently being done with open-weight models, you, in the classified side, and it's just taking off across America because it's cheaper and ends up being safer, and you control your future and your present. You are de facto outsourcing the value of energy. By the way, it's very much linked to the safety concerns. Now, Dario is one of the most important entrepreneurs.

17:13I've been at this for a long time. I've never seen anyone come from the back to me. I know you like him. I have a lot of respect for him. And I have a lot of respect for him because he's actually believes, of course, he's a business person too, most sometimes. So, of course, when the company's not doing as well, these things come forward and then they talk about safety. And when it's doing better, they - You think that's what's going on? I don't think that's actually what's driving this, but, you know, I mean, it does happen regularly. But I think, you know, what makes him so strong is he's ethical and a business person.

17:43OK, so but but but what's actually happening is very different than what people are reporting. Everyone thinks this is a safety versus non-safety versus regulation. What he, I believe, has realized Is If you take the Philosophical frame they have Which is, we are deserving of having all the IP In the world, we the thousand people Who think the way we do That's why you can't work with the military That's why you can take the IP from businesses And put it in your model That model Would require severe Liability protection And there's only one institution that can do that The US government And then that's before you get to the danger.

18:25So what was really happening is the investors loved when he was migrating all the value of everyone else's business to their business because they're investors. They don't realize it's like every mark. They don't realize they're the mark. Because now, first you migrate all the IP to your business. And then because you need uncapped, you need capped liability, both vis-a-vis the business and vis-a-vis the dangers, you've got to migrate the business to the government. It has to be nationalized. So what's actually happening is this is reported as regulation, non-regulation movement. That's actually not what this movement is.

18:58It's like the view that I believe they have is these businesses have to be nationalized because if you don't nationalize them, every single one of my clients is going to sue. You think that's what they want? Well, obviously, like if you have a business that presupposes unlimited risk, both vis-a-vis liability risk, vis-a-vis the clients, because I don't think any of our clients realized their IP was migrating vis-a-vis the world, because you're saying, what is the liability risk for destroying 10 % of the company, 10 % of the world? It's discounted into the present. Okay, but there's only one institution.

19:32And by the way, that's not actually what's happening. They want three institutions. It's going to be like Europe, Canada, and America. We migrate all the IP of America from our businesses to this institution. Then the institution is going to get full liability protection because it's nationalized. Do you think OpenAI wants this? No, no. But it's very, no, I think these are very different things, but I think that is the core philosophy of the EA movement imposed upon a business. EA, effective altruism. Yeah, so that's actually what is driving this. Now, of course, the other model companies have very different, I think what most, what they want is, and I think is, well, first we should self-regulate.

20:08If you do not self-responsibly, self-regulate. By the way, though, the biggest danger currently of this revolution is that it generates inescapably, I think it will raise the boats of most people, but you can't have a revolution where I become 50 times wealthier and everyone else becomes 10 percent wealthier. It's going to drive political insanity. Political insanity. What does that look like? It looks like obviously wealthy people should pay more than fair their share of the taxes. But a wealth tax kills entrepreneurship. It actually is in, by the way, it's massively beneficial to me. So how do you share the benefits?

20:43So you have to find ways to actually tax at the high end that aren't a wealth tax. There are ways to do this. I think the way you do is you tie a reduction of waste, fraud, and abuse to increase taxes among the very wealthy. So, but in any case, you have to, the other political insanity, and then realize the financial thing is look at the far right and far left in this country. This is directly tied to the fact that many people are like, screw this. I don't want these people becoming a hundred times wealthier. I'm going to blow up the whole system. What is that blowing up the whole system looks like.

21:14It looks like DSA people who are very happy to talk about how they're not anti-Jewish. They love that. They don't like to talk about how they're not anti-Black because that's something they hide. You have the far right. It's like everything is a data center run by somebody. It's like they attack us for running data. We don't even build data centers. We get attacked. So that is like, and by the way, one of the biggest mistakes the labs have made is we are in competition with China. Some people think they're our enemy. Some people think they're competitor, pick your spectrum. Either we are going to win and provide the stack to the world, and stack doesn't mean you have to take the whole part, or they're going to win.

21:51And that means the danger is not just the danger of dangerous things happening to humanity, which, by the way, what business isn't responsible for minding your own safety? You can't go to a... You know, another reason our customers are livid is like they build chemicals. But this is a whole new frontier, right? When they're talking about the safety of humanity and creating a technology, an AI that can break free this misalignment from human intention and then do really bad stuff to us? I mean, that's a societal issue, isn't it? Of course it's a societal issue. But you... You think they can self-regulate that?

22:25Well, you have to find a way to set reasonable guidelines that are enforced, but you can't do it. The first line of defense is you're liable for your own actions. So it's a weird twist. They're asking for societal regulation to get out of the first line of defense, which is if you build a technology that can destroy 10 % of the world, that has civil and criminal liability attached to it. The first step is to say, okay, it is not, the first step isn't to say we get out of it because we want to self-regulate or we want regulation. The first step is to say, okay, you've disclosed this. What are you doing about it?

22:59And the second step is to say, if you're not doing it, you're not being responsible here, we're going to have to get people involved. That's going to be also very complicated because regulating these things needs people. You need people who understand them. Another problem we have is seemingly everyone who understands this is on some payroll. So it's like, you know, it's like, who are you going to trust? You know, when we built nuclear energy, we built the bomb. People did it because they believed. They were not on the payroll. The liability that you're talking about, how does that get written into the S1.

23:26What do risk factors sound like? This is the thing. You're assuming that there will be an S1. Okay, maybe there will be. The only way to deal with this kind of liability is to go to the government and say, nationalize us, please. A lot of times in business, people don't say what they want. They're leading you to the conclusion. The reason why people have not understood this is, again, every investor, and there are a lot of people who think they're going to make money, They're like, oh, the businesses are the mark. What is the first lesson in poker and in life? If you think the other person's the mark, you're the mark.

24:03You are the mark. And it will be nationalized simply because of the liability issues they're talking about. Do you think the Trump administration is going to get on board with that? I don't know what they're going to do. And I think that's probably a barrier to entry. but it's like you could delay it. You have to, there's only one, when you have unlimited liability, the only way to deal with it would be to go to the government and say, we'll give you 50 % of our business. Of course, the value of the business will collapse first when you do that, collapse another time when you have people on the board, collapse another time.

24:32All of us might even collapse the whole market, but that is the way you essentially, but again, you have to look at the philosophy of it. Again, this is where the investors have just made such a big mistake with their greed. Like a little bit of greed is great, But like, it's like, no, they didn't mind when the IP is being migrated from every business to an entity they own. But the next step is obviously to take that value and migrate it to the government. But that would never happen to me. And like, and again, this is where I have tremendous respect for people like that, because he's thinking ethically according to his ethical frame.

25:08He's not thinking primarily financially. This is what's made him such a great business leader. This is the reason why the best engineers, researchers want to work for him. It's the reason why he came from fifth behind to number one. This is a very, very smart, shrewd, ethical person. The ethical frame is different than the frame most of us have, which is we need to share wealth. We need to expand the wealth. We need to put more diversity in terms of who owns and who regulates and who controls. and if it started in America, it could have only been built in America. Only America would allow you to buy it.

25:45Only America provided the regulatory frame where this could have happened. America should be the final arbiter of it in the military and in regulation. And that's exactly what they do not want. It sounds like you think his examples of potential harm, right, disabling the internet, you think those are in the realm of the possible. You're not disputing anything. What I'm saying is, if I, let's just take nuclear energy. there it's very like for example one of the reasons france is still much stronger than you'd expect is they move to nuclear if you look interestingly if you look at energy expenditure per unit per person as a function of gdp it's america china uh israel and then switzerland roughly france okay so this is very this is technology that is sharp it's used in medicine it's used in nuclear it powers our deterrence above the air, below the air, in the ocean.

26:38Okay. It can also be abused and there are also accidents. The first step, you cannot say I'm building something, but I have no idea how to bound it. And I don't believe that's what, but again, I don't believe that's what they're saying. That's kind of what they're saying. No, no, no, that's what they're saying, but that's not what they mean. Right. What they mean is the obvious solution is America, gives a risk, essentially limits the risk in return for owning it, or a multinational government does. That's what they're actually mean. That's not what they're saying. Because you couldn't come out to say it because somebody has to, it's like the investors are going to be, what the F?

27:15I thought someone else was the marketer. I'm counting my huge pile of 10 days. It wouldn't be great for marketing an IPO. Well, yeah. I mean, you know, people don't like finding out they're the marketer. But again, And the way you can avoid being in a market in life is to assume when someone is pointing out someone else is a sucker, you're the sucker. So you have, I mean, for people who don't realize, like Palantir, you're kind of the in-between, right? Those frontier models and then the enterprise. You can think of it as you, there's something called an application layer. Historically, the reason we thrived even before people realized the safety issue was this big was that to make these models actually work precisely over very complex use cases, think building, complicated manufacturing, NVIDIA's - Food safety at Chipotle.

28:03Food safety, military, NVIDIA's supply chain, things that are very proprietary and need precision where you own the precision, you need an application layer. The application layer also allows you to use models that might otherwise not be safe, like close models that may in fact be migrating your IP to them. Right. So what I was going to ask is you do a lot of this for the federal government and for the Defense Department. And so you have experience. Well, we are the single most enterprise software company, I believe, in the world. In the U.S., it grew 149 percent. We are famous for what we do on the battlefield.

28:36And on the battlefield, you have exactly these issues. Exactly. That's where I'm going. You can't make these safety mistakes when you're talking about you. Well, you have you look you you're always in the business of reducing things beyond what we could do yesterday and safety and positive and negative. The thing that's very important about the battlefield base, first of all, you are you may or may not. You can help bring our men and women home. So there's like the safety thing. Then there's the precision of what happens. And then very interestingly, national security is different technically than people think.

29:13Even inside an enterprise, there are multiple levels of security. So like, for example, you have levels of classification, but then there are classifications that you need to be classified to understand. So when you're on the battlefield, when a missile lands on our enemy's head, it actually is the concatenation of data sets and precision that's owned in our ontology and in the model they use, where no single component would be able to see the other component. So it ends up being, but by the way, you have very similar issues with like a supply chain and NVIDIA or food safety. I guess what I'm wondering is how do you make sure that that's determined by a human and not by the AI?

29:48Because that's some of the, some people say it's science fiction, but that's what some of the worry is. The human in the loop thing is a very, very big issue. We have powered human in the loop. The complication in defense is you have different ethical standards for offense and defense. so like if i'm attacking you i have to do i'm only allowed to do x things if you're attacking me so the problem in this context is if someone if like we're a peer-to-peer adversary you're going to have to have a response that is not a human it's so quick and also with this kind of technology you can often predict so if we can predict you're gonna you're gonna attack me is that offense or defense because in offense you definitely need a human in the loop in defense there's going to be no time.

30:31Okay, what if I can predict in 35 seconds or in three hours you're going to attack me? Is that offense or defense? And so there are a lot of... The reason why you really, unfortunately, many of my academic colleagues don't want to hear this, you really have to pick a side because in the end, America in all its greatness is a country and we're not perfect, but we are great. It is a decision. And by the way, I've spent half my life studying Chinese culture. I'm a very high-level practitioner of Tai Chi, one of the four great treasures. I'm in no way xenophobic towards Tai Chi. I have great admiration for it.

31:05It's one of the oldest, most productive cultures in the world. I can give you long lectures on this, but in the end, there's a choice. Europe has decided to not participate. Israel is small. Where is a choice? Is it us making these very hard decisions that will be imperfect, or is it them? So next week when she and the president meet, can they agree on some shared risks? I mean, I would love it if it happened. I think it is unlikely we are going to. The problem is we're tight enough as competitors that both sides believe they could win. And so I would look, I would love it happen. I'm not in that room.

31:44I would if it happened, we'd all be happier. A pound share, we'd be happier. If you could have some kind of framework where the two dominant countries could control it, that would change the world. I would be surprised if it happened. I was going to ask your perspective on some of these, on the wars. I mean, you have said, and you have said, we have the best technology and we're winning the AI race and we have companies like Palantir working on it. And yet, you know, Ukraine war, Iran war, we're kind of in these stuck places right now. You know, when you're talking about battlefield performance for Ukraine is a good example.

32:17Every day, when I got there day five, there was not a single person who didn't think they were going to lose. So you always have to look at what happened against expectations. And the countries that are in the West that wield these technologies are Ukraine, Israel, and America. I guarantee you, if you got a classified report from China or Russia, one of their biggest concerns would be the systemic outperformance of these countries on the battlefield where these technologies have been implemented. Guaranteed. In fact, you know, as far as is possible for me to know that without knowing it because I don't interact with those countries, I can tell you this is true.

32:54You think that deters them from Taiwan or something else? Look, there are a lot of variables that go into these decisions. The diagnostic of America and its capabilities on the battlefield, it means that if they believe we were actually to use them, it's just a much higher threshold. But, you know, I mean, like these things are not as like these are multivariable equations and also, quite frankly, often have to do with domestic things that we often overlook. Like when you attack may just have to do with like what is your stature at home? So is there anything if you saw it in the models that they were doing in these AI companies where you would that would that would freak you out and say we can't like we have to draw the line and we can't use this?

33:40This is a situation where we all need to, first of all, we need to get serious. You know, we're talking about like, I'm always telling people in different contexts, you know, there is a rule here for every single business person looking at the show, every single business that's listed or not listed has a set of rules. It's called, I deliver products that are where I do not deliver them if I believe them to be harmful. You just have to start there. And again, I think the discussion that we're having is not what this is about. I think the discussion we're having is I want to do things. I want new rules for myself.

34:14And I don't want to pay the cost, true cost of that, which is liability, primarily civil, but potentially obviously criminal. And that every single, this is why the business people, I mean, I talk to business people every day. I've never seen them this angry. Like it's like in every conversations like this, wait a minute, they got my IP. They want to play by rules. I don't play by, whether that's a hospital service, doctors, real estate, every single business person in the country worries every day about doing something that they didn't even know was harmful. Forget knowing was harmful. You can ruin your business with something.

34:52I know it's crazy. Like you find out there's something in your product you had, you didn't, your absolute best to keep out of it, out of the product. You still can be found liable. Like what you think the plaintiff's attorneys are running up there saying, oh, oh. Gee whiz. They didn't mean it. No, they didn't mean it. No, you're paying your billions of dollars. You lose your house. You lose your future. So I'm just saying you can't change the rule book. But again, I don't actually, do not underestimate Dario's talent. That's not what he's actually saying. What he's actually saying is this technology is so unique.

35:29It can only be harnessed in a multi-jurisdictional, meaning more than one country. And I can only do it if you if I get to transfer all liability concerns within a million up to a million dollars to the U.S. government and probably European and Canadian governments would be the fantasy. And in return. But even Elon Musk was sort of like an agreement. Look, I can't comment on what everyone's saying. I'm just telling you what's happening. I don't I don't know. Like, I don't you know, we're down. We have this massively growing business. I barely get time for error. It's like we're building our products where we are going to own.

36:05Ontology and North fine-tuning the models, fine-tuning the open-weight models, controlling. The sovereign movement was primarily launched by us and NVIDIA. And, like, it's just like, it's like, it's like you're a rock band. I have these huge stadiums of people who want their sovereignty. So I'm just telling, but, and also. That's a pretty high valuation on your stock. Do you think the market doesn't appreciate this? I, look, I mean, we are obviously so systemically undervalued. But it's okay. It's because people are, look, investors, first of all, investors really did fall for, I'm going to make a ton of money.

36:40There's no liability. It's all upside. All the alpha goes to them. And therefore, every value of business is, okay, great. Then these are very technical things. What does it mean to be sovereign? What does it mean to train a model? The more you go into the granular details of our business and how everybody wants to do it, the mere fact, the sovereign movement is so much bigger. We need partners. We cannot scale into our U.S. market. I have people calling me from like very important allies. I'm like, look, we can't deploy. I can't take someone out of the U.S. market. Like these are like crucial deployments where honestly we have the only thing that works.

37:15But it's like, what are we going to do? It's like we have, we're motley 4 ,500. We basically think of it like every company, 3 ,600 people are the, I would say are the best, obviously the best in the world. and we're just, we like, every single one of them has like, I have one guy from England, like, I literally, to get the job done, I'd be like, okay, just pretend you're three people, work around the clock, I'll pay you for it. There's no other way to do it. Why? Because you can't find enough good people? Well, it's, I mean, it's like, hiring and training people to be full Palantirians is a process, and the market is expanding way beyond the way what we can do.

37:59And so, yeah, the market is expanding because, like, if you want to talk about customer demand, every single person I deal with is either on the sovereign thing or wants to be on it or even skeptics. You literally talk to them in five seconds. You're like, well, how do you feel about this and this? And they're like, oh, wow. It's like, it's everywhere. And the depth of passion around this in enterprises, like I've been at this for 20 years. I've been, I was, we, we led the, we led the anti-terror revolution. We led the defense tech revolution. We led with foundry, like products that work revolution, especially in the U S we led the application layer.

38:37We're the first to do the sovereign thing. And like, and I've never seen anything like this. Like every single minute you're not in this country, you are losing money. Really quick before I let you go on, on Dario as an example, what are the odds that that model, his model doesn't survive? And what are the implications for stocks and everything else if it doesn't?

39:01I think he is one of the great legends in tech and business, and I'm not wishing them not to survive. I think obviously everyone's going to move to only using their product and application layer. That's good for them because, and it's obviously better for us, but we were right. But the future is going to be enterprises using multiple models, some open, some closed. They're going to really, where you have actual secrets in alpha, they're all going to move to open models. And where it's like marketing in Argentina and the person wants to use a closed model, they'll do that. I just say, I wonder about the politics of all of this.

39:38Bernie Sanders wants to now ban super intelligence. Elizabeth Warren also is calling for a cause in the AI development. It's not just the left. We have to be like, you know, look. That's both sides. It's the far right and far left. First of all, they're right about the unpopularity, both of the movement and of the people. And they're taking advantage of the fact that the presentation of the technology by the people doing it could not be worse. So, like, my—honestly, if you want to take the far right and the far left, you can't hate the player because they understand the game. It's Shock Talk Day.

40:13They are just monetizing. they understand the political landscape. Are they right? No, but are there elements in truth of what they're saying? Of course, they're abusing elements of truth, but the core truth that they understand is you guys have repped yourself as if you do not have the sense God gave a goat. You are unlikable and you're gonna be 50 times richer and we're not down for it. Then the solutions are only gonna help our adversaries. But again, it's not just Bernie Sanders and Liz Warren or whoever. These are people, by the way, I happen to, if you're listening, I agree with you guys on a lot of issues.

40:46Poor people in this country do not get a fair shake. That's true. And I'm not certain that they're going to get that much of a better shake in five or six years. We agree. You're still calling yourself a liberal progressive, Alex? I am an actual progressive. Actual progressives want poor people, working class people to have better lives. What I disagree with Thelma is that this isn't going to help. But again, you can't go to the player and say, you created the game. I'm not going to monetize it. they're absolutely doing what they need to do. We need to do a better job of doing what we need to do.

41:18Which is talking about the benefits and responsibilities. In any case, thank you very much. Love having you. Take care. Thank you. I knew you'd have a lot to say on that. Alex Karp, one and only CEO and founder of Palantir. When we come back, the next front of the U.S.-Canada trade war playing out in Europe today after the EU invited Canada to become its first ever associate member. Details on that in just a minute. This message comes from Wise Business, the only account your business needs to scale globally. You're building a business with global ambitions, but hidden fees are eating into your margins.

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43:14Fairly tight range this morning, but it's been solid for most of the day today. S &P back to 76.34, more than surpassing yesterday's highs in the Dow's up 3.31. There are some tensions rising between the president and the Canadian prime minister after the EU invited Canada to become the first ever associate member. That's ahead of the Chinese president's visit to the U.S. next week. Our Megan Casella watching all of that this morning. Hey, Megan. Carl, good morning. call it the next front in the U.S.-Canada trade war. President Trump last night saying that Canada's bid to become an associate member of the EU was laughable, and he threatened to put serious new tariffs on Europe or to cut off trade entirely if he deems this alliance to be what he called a hostile act.

43:54Now, Prime Minister Carney today pushing back on the idea that Canada's EU membership bid is a reaction to President Trump or to anything else. He says this is about building resiliency for the future. We are looking for partnerships that are complementary, that reinforce our sovereignty. And that's what is on offer here. And Canadians are united that nobody is going to tell us what language we speak. No one is going to dictate our culture or with whom we can strike agreements internationally. Now, of course, an implicit push there against the president and against those trade talks that collapsed last month.

44:32Guys, a clear geopolitical realignment happening here because of U.S. tariffs as more countries are turning away from the United States. Now, though, pivoting topics to China. Preparations for President Xi's visit well underway here in Washington. I've been told Treasury Secretary Scott Bessent will be leading preparatory meetings this weekend in New York with his Chinese counterpart. AI, trade, rare earths and economic issues all expected to be on the agenda. And those meetings are where we expect any deliverables from the summit to be hammered out. After that, we expect President Xi to arrive here in Washington on Wednesday, President Trump reportedly planning to greet him on the tarmac, a big symbolic gesture, emblematic guys of the pomp and the circumstance that we expect here all next week.

45:12Guys? Yeah, on the Canada-Europe thing, I mean, do you expect that there would be real follow-through on threats of tariffs if they did something like that? Yeah, it's a great question, and it's such an interesting threat because that's what led to this alliance in the first place. It was both the EU and Canada fighting with the U.S. primarily over tariffs that are leading them to do this. And would the U.S. double down with even more tariffs as a result? It's unclear to me what the end goal would be there, why try to jeopardize the trade relationship with Europe even further because of this. Stranger things have happened, though.

45:46Of course, we could see it. But we're still a long way from that actually being carried out. for now, the president just trying to make his disdain known for this relationship and not quite acknowledging his own role in it, but saying that he doesn't like it. Although it did coincide with that House bill, Megan, that would allow the U.S. to tariff countries that are purchasing oil from Russia. If they were to try to retaliate, again, longer term here, would that be one tool they could use? It could be. That's the Lindsey Graham sanctions bill. This idea of secondary sanctions has been tossed around a lot in this term, and we haven't yet seen much follow-through from the White House on it, though that was before there was formal legislation like this.

46:26That bill, to me, is most interesting in light of the Xi visit, because that could be a major target of who is really going to bear the brunt of the punishment there, China being, of course, the biggest buyer of Iranian oil before the war. So yes, there's the Canada-EU element of this, and it could be used as a tool there, but it also could be used as a tool against the Chinese. So far In the lead up to this summit, the president has mostly wanted to keep things on firm footing between the U.S. and China, wanted to keep the relationship strong, hasn't wanted to be too tough on them. Once he signs this bill, though, I'm also watching will he sign it before or after the Chinese president is here, some signaling there as well.

47:02Okay, very, very interesting dynamics at play. Thank you, Megan. Megan Casella in Washington. Much more on AI is coming up. We're going to discuss what Palantir CEO Alex Karp just told us moments ago about regulation and nationalization. A number of interesting threads. Walk on the street. We'll be right back. To find a way to set reasonable guidelines that are enforced, but you can't do it. The first line of defense is you're liable for your own actions. So it's a weird twist. They're asking for societal regulation to get out of the first line of defense, which is if you build a technology that can destroy 10 % of the world, that has civil and criminal liability attached to it.

47:41The first step is to say, okay, it is not, the first step isn't to say we get out of it because we want to self-regulate or we want regulation. The first step is to say, okay, you've disclosed this. What are you doing about it? And the second step is to say, if you're not doing it, you're not being responsible here, we're going to have to get people involved. That's going to be also very complicated because regulating these things needs people. You need people who understand them. Another problem we have is seemingly everyone who understands this is on some payroll. So it's like, you know, it's like who are you going to trust?

48:09You know, when we built nuclear energy, we built the bomb. People did it because they believed. They were not on the payroll. That was Palantir CEO Alex Karp just moments ago. Our Kate Rooney joins us to discuss. In today's Tech Check, I thought he made a number of really interesting points, you know, on one hand, sort of like praising Dario for what he's doing and calling it responsible and ethical, but on the other saying what's really going on here is that they're begging for nationalization of these companies because there's just too much risk and liability around the product. Sarah, I thought that was the biggest headline from Alex Karp, is the idea that Anthropic could be nationalized, talked about some of the investors not necessarily underwriting that.

48:51as part of the story, think about how much money this company has raised in private markets alone ahead of confidentially filing to go public. That, of course, would make waves if there were any sort of nationalization, even if it were a large government stake. The other thing to point out as he talks about this is the fact that Anthropic is a public benefit corporation. So there's certain questions about liability and how much, if at all, that protects them from any sort of lawsuit or saying to investors, hey, you knew this was a risk going in because we have talked about the existential risk to humanity with AI.

49:25And if things have changed dramatically enough where they say it does make sense to be nationalized. I was talking to a former SEC official just a few minutes ago who said that there is precedent for this, who said, basically, you look at the steel industry during World War II, that is probably the last big example of a moment in an industry that was nationalized at a time, I mean, that was wartime, but in some sense, the gravity of what we're talking about in the worst case scenario does call into question. I mean, this is such a critical technology. So Alex Karp obviously is on the ground and probably has thought deeply about something like this, but I think that is the headline of the day, guys.

50:02Yeah, there is the ongoing theory that a lot of this is self-serving, that raising these fears of what could go wrong would allow them theoretically to kind of cut back or restrain their spending, even though the real reason might be because it's just not as economical. I think you're right, Carl. It's right to point out the pushback on Dario Amade, the CEO. But I thought it was really interesting to hear Alex Karp's view of him as a leader in that regardless of what you think about his morals, his ethics, his politics, it's made him a really effective CEO and it's allowed him to recruit some of the smartest researchers in Silicon Valley.

50:38and as he put it, go from sort of number five in the race to number one. And he just talked about the effect that Dario Amadei has had in the industry and that that has really worked for him. His views, regardless of what anybody thinks about them, have been effective in recruiting, at least. And those are the people that are building the technology. And that's part of why he has been so successful. So I think it says a lot that Alex Karp is praising him for that in some way and talking about that effectiveness as a CEO in tech right now. What about the fact where he was talking about how angry that their partners, their enterprise partners are.

51:12They're livid. The kind of safety they're most upset about is what they believe is the theft of their alpha. What do you make of that? Data retention. It's something that Alex Karp has talked a bit about before, and I think that he sort of went viral for that in the Squawk Box interview a few months ago. I hear that all the time, by the way, and it's actually something that Anthropic has tried to right-size and fix and talk about publicly. We've talked to some of their top executives who have said, it's the biggest thing they hear from businesses. They have changed the data retention policies in response to some of this pushback, but it's something also their competitors are jumping on.

51:46I have spoken to people at OpenAI as well on the enterprise side who have said, hey, this is actually an opportunity and has helped us grow our enterprise business. And it's helped the competition because at least the view of Anthropic is exactly what Alex Karp said. And he's been one of the loudest voices on that. But it's something that comes up and it's something that at least in the near term has helped the competition frame themselves as better actors, although, as I mentioned, Anthropica's responded and tried to fix that in some ways. Well, one thing's for sure. I mean, the view from Alex, and I'm sure he agrees with Jensen Wong, and that is that open source is just going to remain a continued source of competition, that maybe some of the closed models might be used for kind of specialized examples or case studies, use cases in countries like Argentina, he said.

52:30Yes. Well, the irony is that the labs have now accused some of the open source versions of actually copying their technology. And so full circle, it may have actually sort of come from Claude, come from OpenAI and ChatGPT in some ways. So there's some irony in that these cheaper versions that are being offered to the rest of the world actually may have come from the American AI labs. And they're really trying to shut that down. But I think you're right. There's a cost question around that. There's data retention questions. And it's a real competitor at a time when both of these labs are looking to go public.

53:00All right, Kate, thank you. Thank you for chatting that out with us, Kate Rooney. I also thought that he connects some of the societal issues really well to what's happening with AI. That, you know, talks about an issue that actually that not a lot of people are talking about, which is the big problem, he says, is that the rich, pointed to himself, get richer and everybody else gets left behind. And that is what causes extremes on both sides when it comes to wanting to regulate and just, well, taxes and everything else. And then all these societal problems where you get, you know, extreme politics as a result of this.

53:32So he talks about the wealth gap there and then also the reputational problem that AI has had in trying to sell America on this. Yeah, he's been very consistent on that, on how arguably the extremely wealthy in this country have not played that position very well. Yeah, it's a problem. And it's resulted in turmoil, social turmoil. And then from there, the solutions get crazy, right? There's a lot of... Right, so he says smart taxes and smart ways about that to try to level the playing field a little bit as we go through this. Really interesting. As for the markets, kind of held steady through all of that, obviously.

54:0476.35, close to session highs as we wrap up the week tomorrow. Yeah, and we're racing a lot of the losses for the week. It's kind of a rethink of the Fed, like maybe we'll be okay with these hikes. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion.

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