PALANTIR ($PLTR)

Decoding The Secrets Behind Silicon Valley's Most Mysterious Tech Company

Named after the “seeing stone” in Lord of the Rings, Palantir truly has its “eye” on everything. This secretive US tech company has stirred significant public interest recently, but despite being around for over two decades, few Americans recognize the name — and even fewer know what it does.

Hidden in plain sight: Palantir helps customers, including the SEC, CIA, and US military, solve complex problems with big data — even preventing terrorist attacks in Europe, per its CEO Alex Karp. In 2023, the company went from surviving to thriving, turning profitable for the first time ever by embracing a new market.

• While Palantir used to rely heavily on government contracts, its commercial revenue has been climbing steadily — fueled by growing demand for its AI product.

• In the last quarter of 2023, its US Government revenue rose 11% compared to the previous year, and commercial revenue grew 32%.

This success translated into tripled annual profits, reaching a remarkable 20% Q4 revenue increase to $608.4M, beating Wall Street’s expectations. Consequently, Palantir’s stock soared ~226% over the past year — surpassing the tech-heavy Nasdaq-100's ~50% gain.

What’s the “Big Data” that’s driving investors’ interest?

Commercial partners use Palantir to gain an edge with AI through its new Artificial Intelligence Platform. Last year, Karp said the product was so powerful that they weren’t sure if they “should even sell this to some” customers. Hype or not, AI isn’t the only thing carrying Palantir. The company has also addressed previous criticisms from Wall Street by tailoring its product to each customer — a costly move for the company.

• Palantir improved its sales process, automated its product, and began hosting “bootcamps” that trained as many as 70 organizations in a single month.

• Near the end of 2024, Karp said the revenue it made per employee almost doubled in the past four years.

Forward-looking: Boasting a $55B valuation and achieving profitability for five consecutive quarters, $PLTR finally meets all the requirements to be a part of the S&P 500. Inclusion could boost the company — but after a tremendous run, analysts are concerned about the stock being overvalued, especially considering its forward price-to-earnings (P/E) ratio of 76x — significantly higher than the Nasdaq-100’s ratio of 31x.

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LARGECAP RECAP

🏦 Investors finally embrace smaller companies, pushing the Nasdaq to all-time highs

Megacap tech giants like Nvidia ($NVDA) and Meta ($META) may have kickstarted the rally that propelled the S&P 500, Nasdaq-100, and Dow Jones to all-time highs this year — but now, everybody else is coming along for the ride. The Nasdaq Composite, which tracks the performance of most stocks on the tech-heavy Nasdaq stock exchange, marked its first record close since Nov. 2021.

• The Nasdaq has surged over 71% from its Oct. 2022 lows, fueled by a run-up in chipmakers and biotech names — lifting the index more than 10% to start the year.

• Represented by the $QQQ ETF, the Nasdaq-100 includes the exchange’s 100 largest firms, driving significant gains and a ~5051% increase over the past year.

Rise of the rest: With positive inflation data and interest rates expected to fall soon, investors are circling back to the Nasdaq’s smaller tech, health care, and lifestyle companies. Over the past month, the Composite has narrowly outperformed the highly-concentrated Nasdaq-100, demonstrating investors’ newfound appetite for smaller, riskier names. Finally, a reprieve for those holding a stock that’s down real bad.

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Markets & Economy

Troubles persist for New York Community Bancorp ($NYCB): Internal issues and a leadership shuffle triggered a sharp decline in the regional bank’s shares on Friday. Despite previous “material weakness” around loan review, new leadership assures investors that a new chapter has begun. [Read]

What’s the deal with shrinkflation? Social media has been awash with reports of smaller grocery products being sold at the original, non-shrunk price. But as the Biden administration vows to combat this, data reveals shrinkflation was actually even worse in 2016. [Read]

China surpasses US in patent applications: In a significant shift, China filed about 10K more patents than the US last year, marking the first time in recent history. Economists say it isn’t US stagnation — other countries are catching up, particularly in AI. [Read]

Business & Wealth

Job seekers and employers are ghosting each other: What was once a Tinder phenomenon is now moving to LinkedIn as a hot job market makes it easier for either side to abruptly cut off communication during the hiring process. Roughly 78% of job seekers admit they’ve ghosted potential employers — while 40% report being ghosted themselves. [Read]

Mounting lawsuits for OpenAI: The Intercept, Raw Story, and AlterNet have joined NYT in suing OpenAI for copyright infringement. Additionally, the SEC is investigating Sam Altman’s departure from the AI giant for evidence of investor deception. [Read]

Posters, beware — your content is being used to train AI: Social media platforms, from Tumblr to Reddit to WordPress, sell user data to train AI systems. Even niche corners of the internet — like World of Warcraft forums — are being fed into LLM datasets. [Read]

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DIGIT OF THE DAY

“Do-Nothing” Vacations Gain Popularity as 21% of US Travelers Prioritize Unwinding

Ever felt like you need a vacation from vacationing? You’re not alone. Travelers worldwide are ditching tourism for “do-nothing vacations,” focusing on recharging at all-inclusive hotels rather than sticking to a packed itinerary.

• In February, 21% of US travelers made “rest and relaxation” their primary motivator for leisure travel — a rise from 17% in a Sept. 2023 survey by Longwoods International.

• In 2024, 72% of Americans intend to maintain or increase their hotel stays compared to 2023, according to the American Hotel and Lodging Association.

The cost of doing nothing: The hospitality industry is embracing this trend by offering wellness amenities and pre-planning meals and activities to satisfy people's craving for easy relaxation. But there's a catch — escalating prices are making people think twice about booking hotel stays, with 56% expressing hesitancy due to inflation. Plus, with the ongoing staffing shortage, guests may need to shell out more for amenities like housekeeping and room service.