Palantir’s relentless rise

0:00In 1898, John Nuveen had a vision to underwrite municipal bonds that would propel American infrastructure into the 20th century. More than 125 years later, that vision lives on. Today, Nuveen has grown into a leading global asset manager with expertise spanning public and private markets, still investing with a future in mind. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible. Depending on how you see things, the company that's one of the best performing on the U.S. stock market is either one of the most interesting around or shockingly overvalued.

0:43News from Palantir. Palantir. Palantir. This is the new buzzy stock. I mean, we're talking about Palantir. Palantir is... I mean, the valuation in Palantir is lunacy. Palantir's stock price is just absolutely bonkers this year. Palantir blew past estimates. We know Palantir has gone crazy. I mean, it's bigger than Adobe and Salesforce combined on a market valuation basis. Palantir is now the most expensive stock in the S &P 500. And it is at a record high after beating on earnings, surpassing a billion dollars in quarterly revenue for the first time ever. The stock has just ripped. You may have heard of Palantir.

1:24It's a data analytics company, and it was mentioned in a data privacy scandal several years ago involving Cambridge Analytica and Facebook. But that's just scratching the surface of what Palantir is involved in. Palantir is a software company that uses AI to do large-scale complicated data intelligence that is being used for helping the U.S. government to track terrorists. It works with U.S. immigrations to identify unlawful immigrants. Military agencies and governments around the world use Palantir's technology for everything from facilitating drone strikes to advancing criminal investigations.

2:07Now, the company's been around for about two decades. And in that time, its work has prompted some criticism. Say it twice! Palantir works with Mike! Say it once! Your weapons and your AI support genocide. Shame on you. It's all about money and power for you. People who are for profits. People who are for profit. Say it once, say it twice. Palantir works with us. You'd think investors might shy away from a company this contentious, but you'd be wrong. Palantir's stock price is up almost 2 ,000 % in just five years. So what gives?

2:55I'm Safiya Ahmed from the Financial Times, in for Michela Tendera. Today on Behind the Money, we're discussing how Palantir became the hottest stock of 2025.

3:27My colleague Tabby Kinder leads coverage of finance in Silicon Valley here at the FT. And she tells me that Palantir entered the tech scene in the early 2000s. Palantir was founded in 2003, shortly after 9-11 in the US, to try and improve national security and the process of identifying and stopping terrorists. At the time, Silicon Valley was very apprehensive to mixing its tech with national security. It was really unusual in the early 2000s for any Silicon Valley companies to be starting with the aim of working for the governments. Most of the companies that were growing and starting at the time were consumer tech focused.

4:17They were, you know, the advent of social media. Think Facebook, Google, Microsoft, Apple. The idea that any Silicon Valley companies would be working for national security, for anything that could be involved with war, conflict, terrorism, it was really sort of culturally not what Silicon Valley was about. And for many years after, you know, the early 2000s, it remained a really unusual thing for a tech company to be focused on. But that status quo didn't scare away Palantir's founders. They're a group of techies, including billionaire investor Peter Thiel, and a guy called Alex Karp, who is now the company's CEO.

5:01Palantir's view at the time, I mean, the view of people like Peter Thiel and Alex Karp was that tech should absolutely be deployed to helping and improving national security. Like, this was exactly the sort of thing that the, you know, greatest minds, the greatest innovators in the U.S. should be working on. Silicon Valley ought to be involved in fighting terrorism and protecting our civil liberties. That's the CEO Alex Karp speaking there. They had always kind of cited the model of the Second World War during the Cold War when the U.S. was working on the atomic bomb. And it was this sort of confluence of U.S.

5:41government money, private sector intelligence, private sector skills coming together for this sort of national security effort. So it was the same kind of idea that fueled this sense that the private sector should really be helping the U.S. in a kind of national security effort post 9-11. Now, in addition to Palantir's unique choice to work very closely with the government as a tech company, the software that it developed is quite unique, too. So Palantir's data intelligence software is, it's kind of opaque, you know, unless you're really inside it, it's hard to know exactly how it works. But it's been credited with all sorts of use cases from helping kill Al-Qaeda leader Osama bin Laden, distributing COVID-19 vaccines during the pandemic, and convicting financier Bernie Madoff.

6:37Palantir's software basically analyzes hundreds of millions of data points to identify patterns or inefficiencies. That means it can be used for anything from making sure a drone strike is precise to helping a commercial business find the pain points in its supply chain. Now in the era of AI, it sounds like kind of obvious, but in the early 2000s, in the 2010s, I mean, having access to that sort of data about your business and being able to understand it better kind of in an instance without having, you know, hundreds of researchers looking into various elements of your supply chains, of your staff numbers, all this stuff over years.

7:20It's a kind of smart, efficient tool for doing that.

7:28Now Tabby, we know that these kinds of things, data privacy, tracking, that can all be quite controversial. And we heard some of the protests that Palantir's work has gotten. Can you tell me a little bit more about some of the specific projects that they've gotten a lot of criticism for? So Palantir came under some fire in the UK a few years ago because of some work it was doing with the National Health Service, the NHS, people were concerned about the access that Palantir might have been given to UK citizens' health records and how that impacted their privacy. Because a lot of their software depends obviously on access to large amounts of data.

8:11And when this starts to be deployed in industries like healthcare, like immigration, even in national security which is their kind of primary business obviously what you're talking about in the end data set is made up of data about citizens and data about people traveling into a country out of a country etc so the biggest concerns about Palantir have always been about data privacy surveillance where the limits are in terms of their ability to access and use this data about us. But also, you often see their name crop up in protests about Gaza, for example, recently. They have done some work with the Israel Armed Forces.

9:00Their data software is deployed there. And, you know, they've had such a kind of important role for the last two decades in terms of working with U.S. national security and the national security of its allies, that they've become very enmeshed in, you know, how the U.S. fights wars, fights terrorism. And so how has Palantir navigated all that criticism? Have they ever said anything? I mean, the way Palantir has navigated that criticism is, if anything, it's helped it, right? So the founders of Palantir have never shied away from controversy, from doing this type of work, from saying they do it.

9:42I mean, they don't consider this type of work controversial at all. Our product is used on occasion to kill people. That's the CEO Alex Karp again. Tabby tells me that he's quite the character. She's met him a couple times. He's a tall guy. He's got sort of wiry, gray hair. He's always saying kind of amusing and quite controversial things. I don't think in win-lose. I think in domination. You know, he's interviewed on TV regularly. He's always talking about the mission, protecting U.S. sovereignty, you know, turning the U.S. into the most powerful country in the world. I think the West is obviously superior.

10:25They don't hold back in terms of aligning themselves with U.S. national security. We're here to serve the American people. And my version of service is the soldiers are happier, the enemies are scared, and Americans go back to enjoying the fact that we're the only one with a real tech scene in this country and we're going to win everything. One of the things he said vaguely recently that got a lot of attention was that he wanted to spray fentanyl-laced urine from a drone onto all the analysts that were negative about his company. And, you know, that kind of sums him up, right? The CEO of any other company that is, you know, a top 25 listed company at this point typically doesn't say things like that.

11:11It's perhaps no wonder, then, that Alex Karp is often described as unorthodox.

11:21The future of fixed income investing will continue to blur the lines between public and private markets. Nuveen's credit platform was built to navigate this shifting landscape, channeling capital toward the businesses, infrastructure and energy solutions that are shaping tomorrow's economy, all while aiming to deliver the resilience and returns that portfolios seek today. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible. So now we know a bit more about Palantir, what it does, who's running the show. But ever since it listed in 2020, the company's stock has been in the single digits.

12:02And for most of its 20-ish years of existence, the company has been loss-making. It's only recently managed to turn around its fortunes. Palantir's stock really started to change last year when it was the best performer of any company in the S &P 500. Its stock grew 340%. And then as we approach the US election in November last year, the stock just really starts going crazy. I mean, it jumped over 40 % that month, which took its market cap to about$140 billion. So suddenly it's right up at$140 billion, eclipsing big defense contractors like Lockheed Martin for the first time. And if that didn't seem impossible enough...

12:55So what was already a kind of unbelievably strong performance in 2024 has just been blown out the water so far this year. So for the second year in a row, Palantir is the top performing company in the S &P 500. And now the company is worth over$400 billion. So you really can't, you know, this is a valuation for this company that is just so out of the realms of what anyone thought was possible, really, even as its stock was climbing last year.

13:34Tabby, what happened? How did this company's stock just go completely insane after being in the single digits for so long? So last year, its growth was mostly to do with this sort of meme stock trading army profile, where a load of traders who really believed in this sort of patriots rhetoric from people like Alex Karp really got on board with CEOs like Alex Karp. You know, this is the same type of people that love Tesla's stock because of Elon Musk's personal profile, the stuff he comes out and says. So the same sorts of people really started boosting Palantir's stock price last year. And then as we got closer to the US election in November, when it looked more and more likely that Trump would win, the stock started going even more crazy because the company seemed so aligned with the things Trump was saying on China, on AI, on the need to improve national security, spend more on defense.

14:43So it became very quickly one of the Trump trades with people piling into it, believing that the company would do well from a Trump presidency. But there are a lot of stocks that kind of got labeled Trump trades too. I'm thinking other tech companies, crypto, oil. Why did Palantir really catapult to the top like this? So Palantir, you know, it was aligned very closely with a lot of what Trump was focusing on. But also it had been really deeply enmeshed in Washington, D.C. for years. And because it started off and continued to be a big U.S. government contractor, it had spent decades lobbying, hiring from governments, its former employees going to work in various government departments.

15:34And this meant that it had this almost kind of revolving door with D.C. that meant it was really well placed to keep winning contracts, having contracts renewed. It was almost like Palantir was in this sort of sweet spot for a lot of what Trump was talking about. And we've seen that bear out, right? Yeah, exactly. Because after Trump was elected, one of the first things he did was set up the Department of Government Efficiency, so-called DOGE, with Elon Musk running it. And that kind of gave more fuel to the fire that these sorts of characters in tech who were outspoken, controversial, who were really throwing weight and money behind bringing technology to the US government to use in the fight against China.

16:26Those were the companies that were going to benefit. So Tesla did well, SpaceX did well, and Palantir did very well. Now this is a huge difference from the Silicon Valley norm that we discussed earlier of staying away from being too close to the government, avoiding defense work. But this is not just a one-off or specific only to Palantir. Tabby tells me that she's noticed a vibe shift among tech companies. The thing that's really changed in the last few years that has helped a company like Palantir grow to the size that we're seeing now is that the world is suddenly involved in a number of big global conflicts.

17:05So in 2022, Russia invaded Ukraine. Since then, we've had the war in Gaza, various conflicts in the Middle East, more recently India, Pakistan. The US has its geopolitical issues with China. All of this means that national security companies, defense companies are much more in focus by a place like Silicon Valley, which for the last few decades has really just, you know, it's been about social media. It's been about consumer technology, the iPhone, etc. Tabby tells me that really in just the last five years, Silicon Valley has leaned into its tech innovation being used for defense and national security.

17:49So where in the past you would never have seen companies like Microsoft, Google working extensively with US government departments, with the Department of Defense. Now it's a crucial part of their business and it's a part of their business that they're sort of not afraid to talk about anymore. As an example, just think back to the Google of 2018. Google's staff staged a really big protest because Google was working with a drone program with the Department of Defense. And at the time, the protests were really embarrassing for Google because they had to walk away from some of that work in order to keep staff happy.

18:29The vibe in Silicon Valley now couldn't be more different. The sense is that these companies are much less afraid to be working with the US government, with President Donald Trump. And we're seeing more and more defense startups. So companies that are trying to kind of replicate what Palantir and SpaceX have been doing for the last 20 years just crop up. There's tons and tons of funding going into companies like these. So it sounds like the political mood in Silicon Valley has shifted. Yeah, so probably a lot of the first real shift that started to happen was during the first Trump presidency, when a lot of well-known executives in Silicon Valley reacted with horror to Donald Trump's election in 2016.

19:18But there were some people in tech that were thinking about whether a Trump presidency might be a good thing. there was a sense that, you know, the pendulum of culture had swung too far one way and now was starting to swing back the other way. But in 2024, what we saw was actually a big swing of mainstream technology executives talking about supporting Trump, funding him. And part of why tech companies really started kind of moving towards the Republicans in the last election was There had been a lot of really burdensome regulations under the Biden administration, a lot of competition cases against big tech companies.

20:05And there was also a lot of talk about new taxes that would have been a huge burden for big technology companies, such as Biden's plan to tax unrealized capital gains. So there was a lot of policies in the last few years that tech executives were really unhappy with. It's probably worth bearing in mind that it's against this political backdrop that Palantir shares have just been going up and up and up. But what are analysts saying? Is there a growing sense that the company might be overvalued? There's no getting around the fact that Palantir trades like wildly high. The stock price is basically completely disconnected to its fundamental financial performance.

20:51There are a lot of analysts that are very bearish on Palantir and that think its stock price is a bubble that will no doubt burst at some point. Because just on any metric, Palantir's current valuation, it just kind of exceeds any sort of rational trading threshold that we've seen in any other company. I mean, it's bigger than Adobe and Salesforce combined on a market valuation basis. Wow. Do you think that the stock might pop? I can't see it happening anytime soon. Part of the reason I think that it probably has further to go, though, is because there are other companies run by characters like this that also trade very differently to the fundamentals.

21:37For example, Tesla. You know, Tesla is huge and that's because it has very loyal traders and fans and stockholders who believe in Elon Musk and believe in what he's set out to do with Tesla, even if the company's performance doesn't necessarily justify that stock price. And I think Palantir's ended up in a similar position where people really believe Alex Karp, they believe that the company is going in the right direction, and they believe that the company will continue to do well, continue to win big contracts. Is that sustainable, though? I think the picture is looking pretty healthy in terms of the work that they're attracting, especially under this administration with all the focus we're seeing in national security.

22:26I mean, just last month, they signed a$10 billion contract with the US Army. I mean, that's the biggest software contract that the US Army has ever signed, I think. So Palantir isn't, you know, the numbers are there. The work is there to justify like a lot of interest in the company. So what would it take then for it to pop? Or is it just going to keep going up? In the AI era, it's really hard to know because, you know, not only is Palantir performing well because of its focus on defense, it's performing well because its technology centers on AI. So if there is some big issue with the AI market generally, like maybe the access to power is under threat or, you know, maybe there's some huge advance in China that means all of our AI in the US and Europe is deemed completely pointless or unusable or too expensive or whatever.

23:23Maybe that would have an effect on Palantir. It would also have an effect on basically every other tech company in the US. So we would be talking about real correction territory. But I think that would obviously damage Palantir. But yeah, in terms of the stage of the cycle that we're in now with AI, where just so much money is being thrown at AI companies, at AI infrastructure, at buying AI technology, that is hugely beneficial to them. Today's episode was hosted by me, Safia Ahmed. It was also produced by me with help from Claire Williamson. Sound design and mixing was done by Sam Giovinco and Breen Turner, and original music is by Hannes Brown.

24:10Manuela Saragossa and Topher Forges are our acting co-heads of audio. Thanks for listening. Thank you.

24:46portfolios seek today. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible.