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 ~51% 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.