The hottest stock on Wall Street is a cryptic company you've never heard of

CNN

3 days ago

After a blowout quarterly earnings report this week, Palantir has become one of the buzziest (and most expensive) stocks on Wall Street.
Shares of Palantir — which we'll shorthand as a 'data analytics firm,' even though that's not even the half of it — have been on a tear. This week, the company reported its first $1 billion in quarterly revenue, beating expectations. That came just a few days after news broke that Palantir had secured a $10 billion contract from the US Army over the next decade.
The stock, which several analysts say is wildly overvalued (with a market cap valuing it at around 100 times its annual revenue), has shot up nearly 600% from a year ago. With a $420 billion market valuation, Palantir is now worth more than The Walt Disney Co. and American Express combined.
And yet, few outside of tech and finance have heard of it. Even fewer could tell you, without Googling, what the company actually does. (And honestly, a quick Google search doesn't come close to capturing the scope and fundamental weirdness of this 20-year-old defense-contractor-slash-commercial-artificial-intelligence-software peddler.)
This is what Palantir is, and why you should care.
Let's start with the name, which helps explain what the company does: 'Palantir' refers to the 'seeing stones' from 'The Lord of the Rings.' They were essentially crystal balls used for communication and intelligence-gathering.
In the most generous sense, that is what Palantir's data analytics tools do: Allow users — mostly military and government agencies, but also private-sector companies — to better visualize large datasets. It promises to use its software to sift through reams of information and identify trends and patterns.
In practice, that means it's enabling a lot of surveillance. By its own admission, Palantir keeps a tight lip about its clients and their activities. But we know a few things:
Palantir's tech is helping the Trump administration as it tries to build a database that includes detailed portraits of Americans, gathered from multiple federal agencies, the New York Times reported in May. (Palantir disputed that reporting and said it does not 'unlawfully' surveil Americans.) That news built on a CNN report that such a database would be deployed to speed up immigration enforcement and deportations.
The LAPD's use of Palantir's tech has come under scrutiny for allowing the force to engage in racial profiling and mass surveillance, according to civil rights groups.
It has helped the Israel Defense Forces strike targets in Gaza.
Palantir reportedly helped track down Osama bin Laden.
And it reportedly helped US public health officials track the spread of Covid-19 by synthesizing data coming from local hospitals, state governments and other sources.
The company was founded as a private government contractor with a mission to 'prevent the next 9/11, without sacrificing American civil liberties,' co-founder Joe Lonsdale wrote in 2020.
Other co-founders include current CEO Alex Karp (more on him in a moment) and Peter Thiel, the tech billionaire, longtime Trump supporter and conservative activist known especially among elder Millennials as the guy who who made it a personal mission to destroy critical media outlets like Gawker. In its early days, Palantir struggled to secure outside investors until the CIA-backed venture firm In-Q-Tel stepped in, becoming the startup's biggest single client at the time and helping turn it into one of the most valuable private companies in America.
Since going public five years ago, Palantir has leaned into its government work, particularly with the Army.
'The company has become so deeply embedded in the Defense Department that some current and former Pentagon officials said they worried about becoming overdependent on a single contractor for their data-processing needs, not unlike how the government has come to rely on Elon Musk's SpaceX for most of its space-launch needs,' according to The Wall Street Journal.
And President Donald Trump himself appears to be a fan. Last month, Trump thanked Palantir CTO Shyam Sankar, among other tech leaders, at an AI conference in DC. 'We buy a lot of things from Palantir,' Trump said. 'Are we paying our bills? I think so.'
Since Trump took office in January, Palantir has received more than $113 million in federal spending for work across the federal government, according to the Times.
Palantir's shadowy vibes tend to be amplified by its CEO's quasi-messianic tendencies.
'Saving lives and on occasion taking lives is super interesting,' Karp told the Times last year.
That echoed another comment from 2020, when he casually told Axios that Palantir's technology 'is used on occasion to kill people.'
Karp is also known for his colorful language on earnings calls, fantasizing about spraying his critics with 'light fentanyl-laced urine,' in one instance.
Investors don't seem to mind.
'Palantir is a mission-driven company, not for lip service's sake,' Gil Luria, the head of tech research at DA Davidson, told me. 'Dr. Karp — and he is quite vocal about this — believes that it's his goal to help protect Western civilization. And there are a lot of people that don't agree with that goal.'
Some of those people include 13 of Palantir's former employees, who wrote a memo in May saying the company's founding principles have been 'violated.'
Recalling the company's namesake, they wrote that the story of the seeing stones 'warned of great dangers when wielded by those without wisdom or a moral compass, as they could be used to distort truth and present selective visions of reality.'
Palantir's leadership has 'abandoned its founding ideals,' including a commitment to transparency, free speech, privacy protections and ethical data practices, the letter said.
'By supporting Trump's administration, Elon Musk's DOGE initiative, and dangerous expansions of executive power, they have abandoned their responsibility.'
Karp took a moment to dunk on his critics this week.
'This is a once in a generation, truly anomalous quarter,' he said. 'We're very proud. And we're sorry that our haters are disappointed.'