Palantir: A 1,700% Climb in 5 Years – The Story Behind the Surge

When Palantir (PLTR) debuted on the stock market in September 2020, the backdrop was fraught with uncertainty. The COVID-19 pandemic cast a long shadow, locking down societies and injecting extreme volatility into global markets.

At the time, Palantir was operating with significant losses, compounded by persistent scrutiny surrounding its government contracts, particularly those with U.S. Customs and Immigration. Moreover, the company opted for a direct listing instead of the more conventional IPO route, adding another layer of complexity.

With an initial trading price of $10 per share, Palantir’s valuation reached $16.5 billion, a notable decrease from its private market peak of $20.4 billion in 2015.

“It was the beginning of the pandemic, no one knew what was happening,” CFO David Glazer stated, reflecting on the market conditions in an interview. “The stock market wasn’t ripping, everyone wasn’t trying to go public, and we decided to go public as quickly as possible.”

Now, five years on, Palantir’s trajectory has defied even the most bullish projections, transforming it into a tech powerhouse.

The stock has experienced an astounding surge of over 1,700%, settling at $182.42 on Tuesday, resulting in a market capitalization exceeding $432 billion. This places Palantir among the top 20 most valuable U.S. companies, surpassing established tech giants like Cisco and IBM. In the past year, Palantir secured a coveted spot in the S&P 500, replacing American Airlines.

The company’s financial performance mirrors this explosive growth. Quarterly revenue eclipsed $1 billion for the first time last quarter, and analysts at LSEG predict revenue will reach $4.2 billion this year, nearly a sixfold increase from 2019. Palantir’s customer base has expanded dramatically, from 125 in the first half of 2020 to 849 by the end of June of this year, alongside the addition of 1,500 full-time employees.

CEO Alex Karp, a co-founder of the company in 2003 alongside prominent investors such as Peter Thiel and Joe Lonsdale, voiced optimism about Palantir’s prospects from the outset of its public life.

“We’ve reached a base where our company is very significant,” Karp, a Stanford Law School graduate and PhD holder in neoclassical social theory from Goethe University in Frankfurt, Germany, remarked. “Being in the public space will help us with our clients and help us grow.”

However, Palantir’s rapid ascent has left Wall Street somewhat bewildered, struggling to reconcile its valuation with traditional metrics, particularly for a company of its scale.

Currently, Palantir trades at a staggering 226 times its projected earnings for the next 12 months, with a forward revenue multiple exceeding 80. To put this in perspective, even Tesla, another high-growth stock, trades at 194 times forward earnings and 14 times revenue over the coming year.

In a recent report, Andrew Left of Citron Research, a well-known short-seller, described Palantir as “detached from fundamentals and analysis.” He argued that if Palantir were evaluated using the same revenue multiple as OpenAI, considering the latter’s recent valuation of $500 billion, Palantir’s price should be closer to $40 – less than a quarter of its current value.

“Karp and his team should be proud. But for investors, that’s where discipline kicks in,” Left wrote. “Comparison is the enemy of happiness, and when measured against true AI leaders, Palantir’s price already reflects success beyond its fundamentals.”

Karp, known for his outspoken nature, has responded to critics by suggesting they “exit” if they “don’t like the price.”

“We are going to be the most important software company in the world, and people will figure out what that’s valued over a long period of time,” Karp asserted during the company’s NYSE debut.

Palantir declined to make Karp available for an interview.

Beyond valuation concerns, Palantir has faced criticism regarding the ethical implications of its technology and its use by government agencies like ICE. This controversy stems from the very core of Palantir’s mission.

Founded in response to national security vulnerabilities exposed by the 9/11 attacks, Palantir developed sophisticated software designed to compile and analyze massive datasets for its clients. The company touts its long-standing partnership with the U.S. Army since 2008, stating that it is “embedding alongside users to design and deploy modern mission essential software solutions.”

Publicly available federal documents reveal that ICE paid Palantir $30 million for providing “real-time visibility” on individuals undergoing self-deportation. Moreover, a recent report in the New York Times alleged that Palantir is aiding the Trump administration in collecting data on American citizens, prompting further ethical debates.

Palantir vehemently refuted these claims in a public statement, dismissing the report as “reckless and irresponsible.” Karp himself has stated that Palantir is “not surveilling Americans.”

The company has also drawn fire for providing technology to the Ukrainian and Israeli militaries.

Karp acknowledged that employees had resigned from Palantir due to his outspoken support for Israel, anticipating further departures. Following the tragic October 7 attack by Hamas, Palantir published a full-page advertisement in The New York Times, affirming its support for Israel.

“From my perspective, it’s not just about Israel,” Karp clarified. “It’s like, ‘Do you believe in the West? Do you believe the West has created a superior way of living?'”

Over the past five years, Palantir has consistently secured significant government contracts, often outpacing established players like RTX. The company has fostered partnerships with aerospace giants such as L3Harris and Boeing. Notably, Palantir recently secured a software and data contract with the Army valued at up to $10 billion.

Throughout these ventures, Karp has remained an unwavering advocate for Palantir’s business operations.

Originally headquartered in Palo Alto, California, Karp made the strategic decision to relocate the company to Denver in 2020, expressing growing dissatisfaction with what he regarded as the homogenous culture of Silicon Valley.

In a letter to investors ahead of its direct listing, Karp stated that the “engineering elite” of Silicon Valley lack understanding of “how society should be organized or what justice requires,” emphasizing that Palantir shares “fewer and fewer of the technology sector’s values and commitments.”

While Palantir’s performance on the stock market has been exceptional, investors have navigated considerable volatility along the way.

By the close of 2020, Palantir’s stock had surged to $23.55, representing a gain of approximately 136%. In his initial letter, Karp had emphasized that “effective software can be essential to an organization’s survival” during times of crisis, a prescient statement given the economic climate.

However, skepticism began to emerge in the latter half of 2021. The subsequent year saw rising interest rates and escalating inflation, prompting investors to shift from riskier securities to safer assets like bonds. Consequently, Palantir’s shares plummeted by two-thirds in 2022, ending the year at $6.42, significantly below the direct listing price.

But in November of that year, the introduction of ChatGPT marked the dawn of a new era in AI, a transformative force that revitalized the tech industry and redefined its potential.

Palantir launched its AI platform, AIP, in April 2023. Designed to securely integrate large language models when handling sensitive data, AIP significantly accelerated Palantir’s ability to access, analyze, and derive insights from information.

The company attributes much of its expansion in the commercial market to AIP. Although government contracts remain its primary source of revenue, Palantir has successfully attracted notable corporate clients such as Wendy’s and American Airlines. This diversification strategy underscores Palantir’s commitment to long-term growth by penetrating diverse industries and capitalizing on the power of its AI-driven solutions.

During the most recent earnings call in August, Glazer reported that the total contract value of bookings for the quarter soared by 185% to $1.1 billion, with U.S. commercial revenue experiencing a remarkable surge of 93% compared to the previous year.

“AIP continues to drive existing customer expansion and new customer conversions in the U.S.,” Glazer stated, highlighting the growing traction of its AI platform.

One notable customer cited was auto supplier Lear, referencing their recent five-year partnership. Palantir indicated that Lear leverages AIP to “proactively manage their tariff exposure, automating multiple administrative workflows, and dynamically balancing their manufacturing lines,” further illustrating the practical applications and value proposition of AIP across different sectors.

Palantir’s stock climbed 341% last year and is up another 141% so far in 2025, signaling continued investor confidence in the company’s trajectory and its strategic positioning in the AI landscape.

The AI is also seeing widespread adoption within government operations, where its capabilities are enhancing efficiency and insight.

In 2024, Palantir secured a contract to develop AI-powered mobile ground stations enabling soldiers to gather data through space sensors. As of May of this year, the Pentagon increased the total ceiling for Palantir’s Maven Smart Systems contract, which supports AI capabilities, to $1.3 billion. This expansion highlights governmental entities’ trust and satisfaction in Palantir’s AI offerings for critical national interests.

Akash Jain, Palantir’s technology chief and president of its U.S. government business, emphasized in an interview that AI has introduced a new spectrum of risks, which urges the government to re-evaluate its approach to commercial technologies. This strategic foresight reflects Palantir’s commitment to responsible and secure tech deployment, establishing it as a reliable partner in the sensitive realm of governmental applications.

“We’re perfectly positioned for the growth,” he said.