I've been digging into the financials, and the bear case on Palantir is officially dead. They are now consistently GAAP profitable, which was the last major hurdle. The risk is gone.
Here's the simple math:
Palantir's market cap is hovering around $370 Billion.
Their software is becoming the essential AI backbone for both government and commercial clients—it's far more critical than a simple CRM from a company like Salesforce (CRM).
Salesforce has a market cap of around $245 Billion.
Palantir has already surpassed Salesforce and is on its way to becoming a trillion-dollar company. Given its importance, it should trade at a valuation closer to Microsoft. A simple 3x from here to over $1 Trillion is a conservative baseline, and a 10x is not out of the question as AI adoption accelerates.
People who are still complaining about Stock-Based Compensation (SBC) don't get it. That's just the cost of acquiring the best engineering talent on the planet. I'm loading up before this is a $1,000 stock.
3 comments
I never understand what they do. And I saw people asking the same question on Reddit and wired. So I'm not the only one.
VCs once told me, if a company can't describe what it does in a simple sentence, that's a warning sign.
I don't want to invest in things I don't understand.
>At 10 times revenues, to give you a 10-year payback, I have to pay you 100% of revenues for 10 straight years in dividends. That assumes I can get that by my shareholders. That assumes I have zero cost of goods sold, which is very hard for a computer company. That assumes zero expenses, which is really hard with 39,000 employees. That assumes I pay no taxes which is very hard. And that assumes you pay no taxes on your dividends which is kind of illegal. And that assumes with zero R&D for the next 10 years, I can maintain the current revenue run rate. Now, having done that, would any of you like to buy my stock at $64? Do you realize how ridiculous those basic assumptions are? You don’t need any transparency. You don’t need any footnotes. What were you thinking?”
-Cisco CEO, post-DotCom.
isn't AI way overhyped?