In an era marked by escalating geopolitical tensions and rapid technological advancements, certain companies have gained prominence due to their strategic importance and innovative capabilities.
The ongoing conflicts in regions like Eastern Europe and the Middle East have underscored the need for advanced defence technologies, driving interest in companies that serve military and intelligence sectors. Simultaneously, the rise of artificial intelligence (AI) has captured the imagination of investors and technologists alike, as AI promises to revolutionise industries.
Palantir Technologies (NASDAQ: PLTR) stands at the intersection of these two powerful trends.
With its roots in providing critical data integration solutions to U.S. intelligence agencies, Palantir has expanded its reach to become a significant player in the commercial sector, particularly through its innovative AI-driven platforms. The company’s ability to blend cutting-edge AI technology with military-grade data processing capabilities has made it a standout in the market.
As geopolitical dynamics continue to evolve and AI advances further into mainstream applications, Palantir’s position as a leader in both arenas makes it a compelling subject for closer examination.
Who is Palantir?
Founded in 2003, Palantir Technologies began its journey by developing software solutions for the U.S. intelligence community, primarily to support counterterrorism efforts.
Over the years, the company has expanded its expertise to cater to a diverse array of commercial enterprises, offering solutions to complex data challenges that parallel those faced by government entities. Palantir has developed four principal software platforms—Gotham, Foundry, Apollo, and the Artificial Intelligence Platform (AIP). Gotham and Foundry enable organisations to integrate vast amounts of information into cohesive data assets, driving more informed decision-making. Gotham has been instrumental for global defence agencies and disaster relief organisations, while Foundry is increasingly becoming a central operating system for entire industries.
Apollo, introduced commercially in 2021, ensures the continuous operation of critical systems by managing software delivery, security updates, and platform configurations across any environment.
The company’s latest innovation, AIP, launched in 2023, integrates generative AI models and large language models with its existing platforms to operationalise AI within enterprise data environments. This innovation positions Palantir as a leader in enabling organisations to harness the power of AI while adhering to strict legal, ethical, and security standards. As Palantir continues to expand its market reach, it remains committed to forming long-term partnerships that transform how institutions leverage data in pursuit of their strategic goals.
Why is it popular?
Palantir has captured the attention of retail investors, largely due to its unique blend of military and AI associations.
Initially, Palantir’s reputation was built on its deep connections with the U.S. military and intelligence agencies. The company’s software has played a pivotal role in critical military operations, reportedly aiding in locating Osama bin Laden. This strong military association provided the stock with a certain allure, particularly among investors interested in defence and security sectors.
In recent years, Palantir has successfully rebranded itself as a leader in AI, thanks to its AIP.
This shift has attracted a new wave of investors who see the company as a key player in the AI revolution. This transformation has fueled a significant rise in Palantir’s stock price, with the company seeing a remarkable 350%+ increase in its share price since 2023.
However, Palantir’s journey has not been without its challenges.
The stock was swept up in the meme stock frenzy of early 2021, with its price soaring to a peak of $45 per share, driven by retail investors on platforms like Reddit. This momentum was short-lived, as the broader tech sector faced a sharp sell-off. Palantir’s stock plummeted by 87%, hitting a low of $5.80 in January 2023. Despite this dramatic decline, the recent resurgence of AI-driven optimism has led to a strong recovery.
The question now is whether this AI-fueled momentum can be sustained, or if it represents another speculative phase in the stock’s volatile history.
Recent news
Palantir Technologies has joined forces with Microsoft (NASDAQ: MSFT) to deploy its AI products on Microsoft’s cloud platforms for US government agencies, AI products on Microsoft’s cloud platforms for US government agencies, including the Department of Defense.
What does this mean?
Palantir will roll out its ‘Gotham’ software, which is designed to pinpoint targets on battlefields, on Microsoft’s Azure Government and Azure Government Secret clouds.
This makes Palantir the first to introduce Microsoft Azure OpenAI Service to classified settings, giving users access to AI language models like GPT-4. Palantir’s AIP aids in testing, debugging, and evaluating AI scenarios, enhancing its defence and intelligence applications. Yet, these uses require government authorisation.
This collaboration highlights Palantir’s strong bond with the US government, with over 40% of its revenue last quarter coming from government contracts.
Why should I care?
For markets: AI ventures take centre stage.
This major collaboration strengthens both companies’ positions in the growing market for defence-focused AI solutions. Palantir and Microsoft establishing themselves as key players in classified AI services could attract significant investments and drive market momentum.
Investors should watch for increased interest in firms innovating at the intersection of technology and government.
The bigger picture: Defence meets the future of AI.
This partnership signifies a broader trend of governmental adoption of advanced AI technologies.
Integrating AI into national defence strategies highlights the evolving landscape of military and intelligence operations. The move also shows the increasing reliance on private sector partnerships to enhance national security capabilities, setting a precedent for future collaborations in AI and technology sectors.
The TAMIM Takeaway
Palantir sits inside a compelling thematic, intertwining the worlds of military-grade data analytics and cutting-edge AI.
With deep-rooted ties to U.S. intelligence and defence agencies, Palantir has established itself as a key player in national security, while its recent ventures into AI have positioned it at the forefront of technological innovation. The company’s ability to seamlessly integrate AI into its existing platforms has not only attracted a strong following but also positioned it as a leader in the AI revolution. As geopolitical tensions rise and the demand for advanced defence technologies grows, Palantir’s strategic importance continues to increase.
This unique blend of AI and military applications makes Palantir a company to watch.
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Disclaimer: Microsoft (NASDAQ: MSFT) is currently held in TAMIM Portfolios as at date of article publication. Holdings can change substantially at any given time.
