Research record
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Revision history
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Investment thesis
The thesis in one line
Palantir is the rare software company turning generative-AI hype into deployed, paid-for production systems — at a valuation that demands you respect the risk.
What AIP actually does
Most enterprises have models but no way to safely point them at their messy, sensitive internal data. Palantir's AIP (Artificial Intelligence Platform) is the connective tissue: it lets organisations operationalise LLMs against real operational data with governance, security and an auditable workflow. Its famous "bootcamps" compress sales cycles by getting customers to a working use-case in days.
Two engines
- Government & defence: sticky, long-duration contracts that provide a stable revenue base and credibility.
- US commercial: the fast-growing engine, where customer counts and deal sizes have accelerated as AIP lands.
The combination is producing genuine software margins and accelerating free cash flow — this is not a pre-revenue story.
The catch: valuation
Palantir trades at an extreme multiple of revenue. The growth is real, but so is the price — there is essentially no margin for error. A single soft quarter can trigger a violent de-rating. This is a Tier 3 position for a reason: own it small, expect turbulence, and treat position sizing as more important than the entry price.
Stage of the cycle
Hyper-growth, hyper-valued — a momentum-driven story stock backed by accelerating fundamentals. The thesis is binary on execution.
Scorecard
Upside 8.5/10 · Safety 4.5/10 · AI exposure 9/10. High reward, high variance — size accordingly.
