Palantir's Mike Gallagher on China's Xi: Our deterrence rests on our ability to scare him
Mike Gallagher, Palantir Technologies head of defense and former U.S. Congressman, joins 'Squawk Box' to discuss the U.S.-China tech war, warning against using Huawei chips, U.S. companies doing business in China, future of Taiwan, and more.
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Los Angeles Times
31 minutes ago
- Los Angeles Times
New disputes emerge ahead of U.S.-China trade talks in London
BEIJING — U.S.-China trade talks in London this week are expected to take up a series of fresh disputes that have buffeted relations, threatening a fragile truce over tariffs. Both sides agreed in Geneva last month to a 90-day suspension of most of the 100%-plus tariffs they had imposed on each other in an escalating trade war that had sparked fears of recession. Since then, the U.S. and China have exchanged angry words about advanced semiconductors that power artificial intelligence, 'rare earths' that are vital to carmakers and other industries, and visas for Chinese students at American universities. President Trump spoke at length with Chinese leader Xi Jinping by phone Thursday in an attempt to put relations back on track. Trump announced on social media the next day that trade talks would be held Monday in London. The latest frictions began just a day after the May 12 announcement of the Geneva agreement to 'pause' tariffs for 90 days. The U.S. Commerce Department issued guidance saying the use of Ascend AI chips from Huawei, a leading Chinese tech company, could violate U.S. export controls. That's because the chips were probably developed with American technology despite restrictions on its export to China, the guidance said. The Chinese government wasn't pleased. One of its biggest beefs in recent years has been over U.S. moves to limit the access of Chinese companies to technology, and in particular to equipment and processes needed to produce the most advanced semiconductors. 'The Chinese side urges the U.S. side to immediately correct its erroneous practices,' a Chinese Commerce Ministry spokesperson said. U.S. Commerce Secretary Howard Lutnick wasn't in Geneva but will join the talks in London. Analysts say that suggests at least a willingness on the U.S. side to hear out China's concerns on export controls. One area where China holds the upper hand is in the mining and processing of rare earths. They are crucial for not only autos but also other products such as robots and military equipment. The Chinese government started requiring producers to obtain a license to export seven rare-earth elements in April. Resulting shortages sent automakers worldwide into a tizzy. As stockpiles ran down, some worried they would have to halt production. Trump, without mentioning rare earths specifically, took to social media to attack China. 'The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US,' Trump posted on May 30. The Chinese government indicated Saturday that it is addressing the concerns, which have come from European companies as well. A Commerce Ministry statement said it had granted some approvals and 'will continue to strengthen the approval of applications that comply with regulations.' The scramble to resolve the rare-earth issue shows that China has a strong card to play if it wants to strike back against tariffs or other measures. Student visas don't normally figure in trade talks, but a U.S. announcement that it would begin revoking the visas of some Chinese students has emerged as another thorn in the relationship. The Chinese Commerce Ministry raised the issue when asked last week about the accusation that it had violated the consensus reached in Geneva. It replied that the U.S. had undermined the agreement by issuing export control guidelines for AI chips, stopping the sale of chip design software to China and saying it would revoke Chinese student visas. 'The United States has unilaterally provoked new economic and trade frictions,' the ministry said in a statement posted on its website. U.S. Secretary of State Marco Rubio said in a May 28 statement that the United States would 'aggressively revoke visas for Chinese students, including those with connections to the Chinese Communist Party or studying in critical fields.' More than 270,000 Chinese students studied in the U.S. in the 2023-24 academic year. Moritsugu writes for the Associated Press.
Yahoo
an hour ago
- Yahoo
3 Reasons Warren Buffett Wouldn't Touch Palantir Stock With a 10-Foot Pole
Buffett only invests in businesses he understands -- and he doesn't understand AI. Palantir's dependence on U.S. government contracts makes it difficult for Buffett to predict its earnings growth. Buffett would likely find Palantir's valuation shocking. 10 stocks we like better than Palantir Technologies › What's the hottest mega-cap stock on the market right now? Palantir Technologies (NASDAQ: PLTR). Shares of the artificial intelligence (AI)-powered software provider have skyrocketed more than 70% year to date. No other stock with a market cap of at least $200 billion has delivered anywhere close to that gain. While many investors have hopped aboard the Palantir bandwagon, Warren Buffett isn't one of them. Don't expect the multi-billionaire to become a fan of the stock anytime soon, either. Here are three reasons why Buffett wouldn't touch Palantir stock with a 10-foot pole. I seriously doubt that Buffett has even looked at Palantir's financials. Why? The company's business isn't in Buffett's wheelhouse. The legendary investor was asked at Berkshire Hathaway's annual shareholder meeting last month if he anticipated being able to put the conglomerate's hefty cash stockpile to use soon. Buffett replied that he'd be willing to invest $100 billion in a company if it met several criteria. First on the list was that he understands the business. Granted, Berkshire's portfolio has included software companies in the past. Snowflake is a great example. However, CNBC noted shortly after Berkshire invested $800 million in the AI cloud software provider, "It's widely speculated that Buffett lieutenants Todd Combs and Ted Weschler orchestrated the Snowflake bet." I think it's a safe bet that this take is correct. Buffett has readily acknowledged that he doesn't understand AI. I suspect Palantir's AI-focused business is enough reason by itself for the legendary investor to avoid buying any shares. Let's suppose, though, that Buffett didn't shy away from investing in Palantir because of its business. I still don't think he would buy the stock for another critical reason: He couldn't reasonably estimate the company's long-term earnings growth. Buffett wrote to Berkshire Hathaway shareholders in 2014 that his first step in evaluating a stock (or business) he's considering buying is to try to estimate its future earnings for at least the next five years. He stated, "If, however, we lack the ability to estimate future earnings -- which is usually the case -- we simply move on to other prospects." I seriously doubt that Buffett would be able to project Palantir's earnings growth because so much of the company's business stems from U.S. government contracts. How much federal money Palantir might receive depends in large part on which way the political winds are blowing over the next few years. Buffett's nickname is the "Oracle of Omaha," but even he probably wouldn't try to predict what will happen in Washington, D.C. Buffett studied under Benjamin Graham, who is widely recognized as "the father of value investing." Although Buffett isn't as much a purist value investor now as he was in the past, he still looks closely at stock valuations before investing. I'd bet that Buffett would find Palantir's valuation shocking. Actually, I think many investors would find it shocking. We're talking about a stock that trades at roughly 103.9 times trailing 12-month sales and more than 238 times forward earnings. The only way those metrics would be justifiable is if Palantir were generating truly spectacular growth. To be sure, the company is growing rapidly -- 39% year over year in the first quarter of 2025. But is this growth rate sustainable? Probably not. Palantir's own revenue guidance for full-year 2025 reflects expected somewhat slower growth of around 36%. The consensus Wall Street estimate is for even more of a slowdown in revenue growth next year. Could I be wrong that Buffett wouldn't touch Palantir stock with a 10-foot pole? Maybe. But with the AI software company's stratospheric valuation, I'd be comfortable making it a 20-foot pole. Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Keith Speights has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway, Palantir Technologies, and Snowflake. The Motley Fool has a disclosure policy. 3 Reasons Warren Buffett Wouldn't Touch Palantir Stock With a 10-Foot Pole was originally published by The Motley Fool Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
2 hours ago
- Yahoo
Could Buying Palantir Today Set You Up for Life?
Palantir stock has been a top performer, and the company's earnings have soared too. Though the company's prospects look bright, investors have worried about the stock's high valuation. 10 stocks we like better than Palantir Technologies › Palantir Technologies (NASDAQ: PLTR) has been around for more than 20 years and in its earlier days was most known for software contracts with government clients. But in recent times, commercial customers have offered this player an exciting new revenue stream, and today, with both government and commercial growth soaring, the future looks bright. Investors have recognized this, and they've been piling into Palantir shares for quite some time. Last year, the stock surged 340%, posting the best performance in the S&P 500. In fact, Palantir's share price has climbed so far and so fast that it's found itself at an eye-popping valuation. Still, earnings have continued to march higher and haven't shown any signs of slowing. Considering this, could buying Palantir today, even at the current valuation, set you up for life? Let's find out. So, first, a quick summary of Palantir's business. The company, through its software platforms, helps customers aggregate often the most disparate of data to make better use of it. Palantir has integrated artificial intelligence (AI) into this process and two years ago launched its Artificial Intelligence Platform (AIP). This has made the company one of the superstars of the AI boom as both governments and commercial customers raced to get in on this often game-changing tool. AIP can be useful in everything from battlefield operations, immediately identifying risks and implementing key plans, to business needs -- for example, customer United Airlines is using AIP for predictive maintenance, helping the airline avoid delays and millions of dollars in costs. How did Palantir reach so many customers so quickly with AIP? The company launched AIP bootcamps, sessions that allow potential users to go from zero to a use case within hours -- so they can see exactly how AIP could benefit their businesses. All of this has translated into explosive revenue growth, particularly as commercial customers discover that Palantir is no longer a business that primarily serves governments -- instead, its technology has broad applications that also are valuable in the commercial world. In the most recent quarter, U.S. commercial revenue advanced more than 70% to $255 million, and the U.S. commercial business delivered its most valuable quarter, booking total contract value of $810 million. That's up 183% from the year-earlier period. As I mentioned, this is as government revenue continues to climb in the double digits quarter after quarter, so Palantir has conserved the growth of its main revenue stream -- the government business -- and added to it with a newer and high-potential revenue stream -- I say "high potential" because companies across industries are aiming to apply AI to their businesses, and Palantir's AIP makes it easy for them to do this. Importantly, Palantir isn't only focused on revenue gains, but the company also has struck a fantastic balance between growth and profitability -- as seen in its Rule of 40 score. Scores of 40% or higher indicate a software player has balanced these two priorities well, so Palantir's delivery of a score of 83% shows the company is hitting it out of the park. Only about a third of software companies meet this rule, according to McKinsey research, and this further highlights Palantir's accomplishment. All of this is very positive, but now let's look at the one point that's been a thorn in the side of Palantir and its investors: and that's the stock's valuation. Today, it trades for an eye-popping 219 times forward earnings estimates, making some investors question whether they should buy the stock or even stay invested if they've already bought it. At such a valuation, the risk is any disappointment could hurt stock performance. So, considering all of this, could this unstoppable (at least so far) stock set you up for life? There actually are two questions here, and the first is: Is Palantir a buy? If you're a value investor, you're sure to find a stock better suited to your strategy elsewhere. But if you're a growth investor and aim to hold on for at least five years, even at today's high valuation it's worth picking up a few Palantir shares. The forward price-to-earnings ratio we looked at, above, considers potential earnings next year -- but not over the long term. Palantir is well positioned to gain as the AI boom continues over the next several years, so even if the stock dips at certain points here and there, you still may benefit greatly from an investment today. As for setting you up for life, this growth stock could help -- but it's never a good idea to depend on one stock on its own to do the whole job. It's much too risky to put all of your eggs in one basket. Instead, supercharge your wealth-building power by investing in several quality stocks and holding on for the long haul. Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 173% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy. Could Buying Palantir Today Set You Up for Life? was originally published by The Motley Fool
