Can Palantir become the next "millionaire maker"?

Palantir, the data analysis giant, faces opportunities and challenges after Trump's victory in the 2024 US presidential election, with Trump returning to the White House. This news has not only caused waves in the political world but also stirred up a storm in the capital markets. Palantir Technologies, a technology company with big data analysis at its core, saw its stock price rise by over 40% after the election results were announced, becoming the focus of the market. However, does such a soaring stock price truly reflect the company's fundamentals and future prospects? This article will explore the opportunities and challenges that Palantir may face after Trump's victory.
Founded in the 2000s, Palantir is known for assisting governments in handling big data analysis. Initially, the company made a name for itself in the US war on terror, participating in highly classified missions such as assisting in the capture of terrorist Osama bin Laden. With technological advancements, Palantir's software has gradually been applied to more areas, including law enforcement, finance, and healthcare. During Trump's first presidential term from 2016 to 2020, the US Immigration and Customs Enforcement (ICE) collaborated with Palantir to track and deport illegal immigrants using its software. Palantir's software can access government records (e.g., DMV, child services) to analyze potential illegal immigrant information and provide the data to law enforcement agencies. This feature has garnered attention and also sparked widespread controversy among the public and privacy advocacy groups.
In 2024, Trump was re-elected as president, and the Republican Party held the majority in both houses of Congress. The market widely expects Trump to resume and intensify the enforcement of immigration laws, making Palantir once again the focus of investors. According to data from the US Department of Homeland Security, as of 2022, there are approximately 11 million illegal immigrants in the US, and stricter enforcement of immigration laws will undoubtedly bring more business opportunities to Palantir. However, it is worth noting that although the market expects Palantir to see business growth in the next four years, the total revenue the company received from its collaboration with ICE from 2013 to 2022 was only 0.127 billion dollars, averaging less than 15 million dollars annually. This data seems insignificant compared to the contract income the company received in other sectors. For example, in 2024, Palantir signed a 0.48 billion dollar contract with the US Army to develop the Maven intelligent system, a platform using artificial intelligence to identify and combat enemy military systems.
In the third quarter of 2024, Palantir's revenue reached $0.729 billion, a 30% year-on-year increase. CEO Alex Karp attributed this growth to the demand for ai from U.S. government customers, with government business accounting for 44% of sales in the quarter. While Trump's reelection may further drive demand for Palantir software from the government, the current market valuation appears overly optimistic.
Palantir's P/E ratio is as high as 143 times, far exceeding the 23 times of the s&p 500 index and 38 times of the industry-leading company Nvidia in the asia vets sector. Such a high valuation implies that the market has placed very high expectations on Palantir's future growth. However, for new investors, such a high valuation may entail significant investment risks. Once early investors decide to cash out, new market entrants may face pressure from stock price corrections. Since Palantir went public, its stock price has risen by over 530%, indeed making many early investors profitable. For those who invested in the company in the early stages, Palantir is undoubtedly a "millionaire maker." However, for current new investors, whether such a high valuation signifies huge future returns, or is just a bubble inflated by market sentiment, is worth careful consideration.
In the long run, Palantir's core competitiveness lies in its strong data analysis capabilities and deep cooperation with the government. The enforcement policies of the Trump administration may drive short-term performance growth for the company, but the market should not overlook the potential for its diversified business. In recent years, the company has actively expanded its business in civilian sectors such as finance and medical, striving to reduce its reliance on government contracts, which is also a key direction for its future development.
As a leader in the big data analysis field, Palantir's success lies not only in technological innovation but also in its extensive applications in government and commercial sectors. Trump's victory has indeed brought new market opportunities for Palantir, but the current excessively high valuation also requires investors to remain vigilant. For potential investors, short-term fluctuations in stock prices do not necessarily represent the company's long-term growth potential. When investing in Palantir, perhaps more attention should be paid to the stability of its core business, its ability to expand in emerging markets, and whether it can maintain leading technology in fierce competition. Only in this way can one truly determine whether the company can become the next "millionaire maker" or is merely a high-risk investment driven by market sentiment.

The above is solely my personal opinions and views... Don't take it too seriously 🤗 Of course, I also hope you can share your opinions with me and together we can share the thoughts...

Nonsense.