Palantir Just Hit a New Low. Then the CEO Dropped This Bombshell.

Palunteer hit a new bottom last month, but could some new news from the CEO be a catalyst for this company moving forward? Joining us today is marketbeat analyst Chris Marotch with that update on Palunteer. Chris, I'm excited to get to this brand new news from the CEO of Palanteer, Alex Karp. He had some really heated words for Anthropic and Open AI that are going to be a really good discussion. So, we're going to get to that later on, but I do want to start out with just looking at the stock story for Palunteer because I know that's what investors are most interested in. If you're a Palunteer investor, the end of June was not a great month for you because the stock hit a new 52- week low. >> It certainly did. It had been uh trading in a pretty defined range really since the beginning of the year. It dropped like all tech stocks did about the middle of November, dropped into the first year, and then it had sort of settled into that range. was around 157 at the top and then it was going down to about 130 at the low and then it broke pretty convincingly below that at the end of June. A lot of people have said it was, you know, it was a rotation into other areas of the market. Some were saying it was about the SpaceX IPO. I don't know. I mean, what I've sensed for a while, Bridget, is that money isn't leaving the market. It's just moving into different areas. Even within the AI trade, the market isn't really as broadened out as a lot of people are thinking it will be. But I think the reality is money is just moving for different opportunities. And right now I think we're talking about summer. It's a little bit lighter volume and people are just looking for other opportunities and they're just not seeing that in Palunteer right now. >> Yeah. I wondering from viewers watching this if you are a Palunteer bull, did you add more Palunteer to your portfolio when it hit that new low? Or are Palunteer bulls out there worried about Palunteer stock price sliding even further down? I want to hear your take on that, Chris. Do you think that there could be potential more downside down the road? I know we had a nice bounce after it hit that low and we're still in that bounce phase for Palanteer right now, but do you think that there's a possibility it could go below 100 like some people feared we'd see just a couple of weeks ago? >> I don't see that happening. And the reason why I don't see that happening is because the company is going to report earnings on August 3rd. I expect that that report is going to silence any of that talk because I I expect that Palanteer will report another strong report. So if nothing else, you've seen in the last couple of earnings reports, Palanteer has tended to dip after the report. But I think what it will do is it'll affirm where the floor is for Palanteer. It may not give investors that push higher that they want to see, but I think it certainly is going to say this area maybe around 130 135 is certainly the floor and it's deservedly the floor. >> Yeah, some very interesting moves in Palunteer right now. And I think earnings, like you said, is one catalyst coming up down the road that could move this stock uh the right direction for Palunteer investors anyway. And I also want to talk about this other major catalyst that just came up. And I was want to spend the majority of the conversation on this because I think it's an interesting topic that could impact not only Palanteer stock, but really the whole market and AI story uh to come. And that's what Alex Karp had to say. This was new. Was it just this week? >> Uh it happened late last week. Alex Karp appeared on CNBC and the conversation was supposed to be centered around the new deal that Palunteer had struck with Nvidia. And as Karp tends to do, he went off script a little bit. He started framing the deal in the context of the tokenization argument that's going on with a lot of enterprise customers and the frontier model. So we're talking about the open AIS and the anthropics and the tokenization of AI. And what Alex Karp was saying, the the argument that he was making was that enterprises that are routing their proprietary data through OpenAI or Enthropic, the frontier models, they are running a risk of handing their competitive edge over to a company that while you're not going to necessarily see anthropic or open AAI compete with whatever company it is, that there's no telling that they can't use that data to assist another company with competing against them. >> The conversation here is that data is really proprietary that you need to protect your data. So, it's a little bit of a cyber security story and it's also just on the the data side of the AI story. And this is been a conversation that's come up on the channel before talking about some different companies that came up because of this idea of data isn't free. The data that AI models need to to learn to to to give you that information. and they have to get that information somewhere. And how do you monetize on the information that all these AI models are being fed? And I think that that is a a new concept that's been popping up from the last year at least. And Alex Karp is really hitting on that point. The moat that Palanteer brings for large corporations is that their data and their information stays within their their company. How valuable do you think that that premise could be for businesses and corporations? For personally I think it's critical and Alex Karp was was saying this is what my customers are telling me and what my customers are telling me is I don't want to give away my data. I don't want to give away that alpha which is essentially again why they're choosing to use Palunteer which operates at the application layer not at the at the layer of these models. I think that's interesting that there really are two sides to this argument that Alex Karp was maybe playing catch-up making this statement to say we shouldn't be losing business. There's that one argument of how people perceived what he had to say and there's the other side of the argument which is he's he's hearing from customers who are continuing to be Palanteer customers that the reason they like Palanteer's product versus bringing an LLM into their organization is to protect their data and to make sure it's secure and uh proprietary to their own organization. And so a little bit of a discussion here on a AI models. I think for some people who use AI all the time, this is very familiar to you. But if you're not familiar with the use of AI, there's these agents that these LLM have. So if you have Claude, you'll have a a Claude bot that you can invite into your system that can read your emails, that can be a part of all of your Slack channels, that can be a, you know, just a part of all the information and communication within your company and organization. And I do think that there's a risk there. Do you think that that is something that Anthropic and Open AI are already addressing? Is that is that a real argument? Or is it something that those companies are already addressing? >> Whenever I hear a debate like what's going on right now with what did KARP say, what did he mean, what are the implications, I always like to try to look at the other side of the argument because you know that I'm bullish on Palunteer. So I try to look at the other side and say, okay, where is their strongest argument? And one of the strongest arguments that I was hearing this week was that the data concerns are not real because a lot of these enterprise customers don't use the LLMs for their mission critical work. So therefore, they're not as concerned about that data leaving their their enterprise. Okay. But if that's true, then that really goes back to another point that Alex Karp, I've heard him make repeatedly over the last couple of years, and that is if you're not using the LLMs for your mission critical work, then what are you really doing with it? That's where you're using the LLM as a toy and you're not using it as a as something that's really going to extract value from your business. And that's exactly what Palunteer that's the opposite I should say of what Palanteer is doing. Palanteer is coming into the companies and saying you can trust us with your mission critical data because we're going to use that data and we're going to extract insights out of that that you can use to make your business more efficient and more profitable right now and that's paying off. >> Yeah. And we see that in Palunteer's subscription numbers too, right? So let's talk about that a little bit for Palanteer. Again, I like to to see the the data and the actual numbers to back up some of these arguments that CEOs and people can talk about, but let's look at the the real the real data and the real numbers. Is Palanteer getting more users, and are those users continuing to sign up for subscriptions to their service? >> Well, what we know from last quarter is that they had like a 71% year-over-year gain in revenue. that's showing up in earnings, although again not as fast as the valuation police would like to see, but it is showing up in the company's earnings. And in that interview with CNBC, um Karp threw out a number that got a lot of Palunteer critics uh up in arms where he said he's expecting Palunteer to generate 15 to$18 billion in free cash flow within 2 years. So by 2027, 2028, depending on how you measure that, he's saying they're going to be generating that kind of free cash flow. Again, the the Palunteer critics dismissed it. But I would I would point out, you know, in 2023, he projected that by the end of 2025, Palunteer would be generating about $4.5 billion in revenue. For the fiscal year of 2025, they generated $4.475 billion in revenue. So a rounding year to get to 4.5 billion. So he was pretty much right on the number there. He has a history of making these claims that everybody thinks are going to be outrageous, but they turn out to be true because generally when you're a founder and you're a CEO of the company, you're pretty close to your data and you know what numbers you're drawing and he's basically saying we've got more work right now than we can actually we've got a backlog that we can't fulfill right now. >> Yeah. So there's clearly demand for what he's doing. I think the prediction part is really interesting there to know what he's predicting for the the growth of their company. I think the one thing that is difficult to predict in this environment of how rapidly AI is advancing is the impact of all of these new advancements and will Palunteer stay ahead of the pack? Will Anthropic and Open AI and the advancements that they're making overtake some of Palanteer? And I know that's an old argument. That's one that's been around for a few months now. But let's talk a little bit more about that potential OpenAI anthropic threat to what Palanteer has to offer. And I want to also talk about what we're seeing with the the delay in the IPO with one of these major companies too and what that has to tell investors about where the market is looking in this whole developing and ongoing AI story. >> I think you're hitting on something that maybe isn't getting talked about enough. I'm sure it is by in some circles but most people especially the people that are investing in Palunteer understand is that anthropic and open AAI are not direct competitors with Palunteer. They operate on a different layer of the AI stack. The concern is that at some point would these models, would these agents, would these companies be able to replicate an ontology layer such as what Palunteer has? That would be the risk. We're not seeing that right now in the numbers that Palunteer is posting. We're not seeing that in terms of contracts that Palunteer is losing. They're not losing revenue. revenue is still growing at a very strong clip as our earnings. So I think that's an unquantifiable threat. I can't say the risk is zero, but I don't know where I would say the risk really is. The second issue you brought up was the delay in the IPOs. This is what I think is really interesting. The delay in the IPOs is I think OpenAI and Anthropics nod to the fact that the SpaceX IPO, the need for hyperscalers to be going to the private markets for funding for some of their data center buildouts, there might not be as much uh juice to squeeze out of that orange as there was and it might be better to push that off into 2027. However, I think that also makes an important point. If the companies were making the arguments that they're making, I would think there would be enough juice. And the fact that they're saying there isn't enough juice is probably reason to say there's something to wonder about there in terms of how much value are they really delivering from a private credit perspective. >> I think this conversation gets us back to looking at what this means for Palunteer investors. And I'm I'm curious if this stock price decline that we've seen really for most of the last year has everything to do with this threat of anthropic and open AI and eating away at some of their business developing their own model. If Palanteer has truly just gotten lumped into that software concern story and that is all of the reason for the the decline we've seen in the stock price, do you think that that has a big reason to do with what we've seen in the price action? No, I I'm not going to say it doesn't have any reason, but I think it I think it all comes down to valuation and I think it comes into a company that is growing into its valuation. I think that's really what you're seeing with the stock. I think the whole conversation about the SAS apocalypse, the whole conversation about Anthropic eating its lunch and Michael Bur shorting it, those are going to give investors who are looking for an emotional reason to sell because there's not really a practical reason there that gives them the emotional reason to do what they wanted to do anyway. And that's what I think you're seeing. When you and I have talked on this channel, Bridget, late last year when Palunteer was getting up over $200, you know, it was over 180, then 190, then over $200, I was the first to say the stocks out over at skis. And I and I said nobody ever got broke taking a profit and it might be a really good idea if you took a little bit of your profits off what you've made in Palunteer. If you did that, you're very comfortable with what's happening right now. Did I expect the stock to go all the way down to where it is right now? I don't know. probably down a little lower than I thought. I thought it might hold the line around 150. Um, it's dropped to 130. It doesn't really bother me. I think the stock was ahead of itself. And I think even for me who doesn't really pay a lot of attention to the valuation argument, the stock was ahead of itself. So, it doesn't surprise me that it's pulled back. We're trying to have real price discovery with the stock right now. I'm fine with it. I still look at where the analysts are targeting the stock. They're still saying it's going to be up around $190 as a consensus. Some of the more bullish analysts that I've talked about in the past, the Dan Ies, the Keith Fitzgeralds, and others who are saying Palunteer's price is going to be well over $200. I think the stock's going to take off. When that's going to happen is anybody's guess, but I do think that there is a long-term case to own Palunteer. And I think if you are a person who's looking at buying and holding Palunteer for the next three years, five years, the prices you're getting right now, even if you bought the stock when it was considerably cheaper than it is now, it may be worth nibbling on the stock a little bit. Even if that means raising your average cost just a little bit because you're getting a price that I don't think you're going to be seeing the stock get much lower than this over the next 3 years. >> Yeah, I'm curious how many people watching got in on Palunteer and added more when it was down at that 106 bottom that it saw just a couple of weeks ago. Again, it's interesting to see will that be the bottom for a long time to come or uh could we see that 52- week low tested again in the coming weeks or months ahead? That will be interesting to see for sure. Um I I think it's great that you talked about you mentioning you were one of the first to say, yeah, this stock has gotten ahead of its skis that yes, you are a huge bull on Palunteer, but the stock had gotten ahead of itself. And and that's similar to I think what's happening in the robotic sector. I know we we mentioned that report earlier, but again, a lot of these robotic stocks went very very high about the same time that Palunteer was going very very high. But many of them have pulled back right now. So, our really interesting entry points much like what we're talking about with Palunteer. Again, if you want to look at that full list and that get that full report on the seven best robotic stocks to be invested in right now, you can scan the QR code or go to that link in the description to get that report. some parallels there with that whole AI story of of just stocks that get a lot of excitement from the retail investing community specifically that help to raise that stock uh maybe higher than it should be. And so maybe it's just a reality check for Palunteer investors. I want to get into a little bit more that long-term bullcase for Palunteer that you're making. One of the things you talked about earlier that I wanted to get back to is uh the reason Alex Karp was on CNBC anyway was talking about the new deal with Nvidia. So let's talk about that deal a little bit and what that alone could mean as a catalyst for Palanteer. >> So Palanteer and Nvidia have had a relationship for a long time, but in this case, Palanteer just recently launched a new um intelligence model that runs on Nvidia's Neatron family of models. The distinction here is that that particular um family is an open-source suite of models that are built for deployment in classified environments. That's where Palunteer lives, at least on the government side of its business. It's the type of thing that should solidify Palanteer's uh business with the US government and particularly with the Department of War. I mean, if you're not a computer person, that might have sounded like gibberish for a minute there. But I think it's important to talk about that that model has to do with uh, you know, closed security and that is really Palunteer's mode in the AI story is that they're also part of that secure space. Is this deal big enough to to make an impact on Palunteer's books? >> I think that's hard to tell right now. I think what you're going to be looking at, not necessarily in this earnings report coming up, but in the ones down the road, is what are you going to be seeing as far as the stickiness of that government revenue, which can tend to be lumpy. I don't disagree with that. But the reality is, are you going to see Palunteer continue to grow that business on the government side? I suspect that you will because again the point that Karp was making about open-source models and data. It's an existential risk on the government side. And what what this deal with Nvidia is doing is it's bringing a way of securing that data when you're talking about sovereign AI. And that's what you're really what you're talking about here, which I think can be something that investors are going to want to watch for. But with Palunteer to me it's always been about not just seeing the growth on the government side but seeing the growth on the commercial side which has been very strong over the last few quarters. >> Yeah. And that seems to be more of what Alex Karp was addressing in his conversation. I want to be a little bit of a devil's advocate like I usually am. And that's just wondering from the the critics who watched that and thought it sounds a little bit like Karp is essentially doing a sales pitch to corporations right now trying to say this is why you want Palunteer and you don't want to go with these other LLM models. Is there some kind of a scare tactic here of you're going to lose your data if you go with these other options? Is there reality behind that claim? If you can show me evidence that customers are dropping Palunteer because they don't feel their data is safe with Palunteer, then you have an argument. If you can't find that, then that tells me that what Alex Karp is saying, dissect it down and boil it down to is what he's saying accurate and true. I think it is. and you're talking about a person that, you know, nobody's going to question the the intelligence of Alex Karp. Nobody's going to question the software chops that he has. So, I understand the argument that he could be talking his book, but I just don't necessarily buy that when you look at what other customers are saying about Palunteer and the essential role that it plays in their business. >> All right, an interesting take. Thank you for looking at both sides of that potential story. Again, I want to hear from viewers about what you think about that conversation, whether you're still very bullish on Palunteer and adding more stock right now or if you're getting a little hesitant on whether this stock is going to get you any more gains uh than what you've already seen. Let me know your thoughts in the comments. And if you want to hear a really great Palunteer discussion from me and Tom Nash, one of the original Palunteer bulls, who's obviously still very bullish on Palunteer, you can check out that full interview Here.