Palantir’s CEO Karp defies Wall Street, leads AI surge to S&P 500

Alex Karp, CEO of Palantir Technologies, has a combative relationship with Wall Street, often dismissing analysts while championing retail investors. Despite his unconventional style and criticisms of short sellers, Palantir has joined the S&P 500, marking a key corporate milestone. Karp's leadership has helped the company capitalize on the AI boom, driving significant stock growth, though sceptics remain due to Palantir's management choices and strategic missteps..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..By Lizette Chapman.Alex Karp, co-founder and chief executive officer of Palantir Technologies Inc., has a love-hate relationship with Wall Street. .___STEADY_PAYWALL___.First, the hate: Karp once said that being the leader of a public company made him feel like a "caged animal." He's said that analysts don't understand the company and that he prefers Palantir's loyal army of retail investors, more than 60,000 of whom have congregated on the subreddit r/PLTR and nicknamed him "Daddy Karp.".Karp particularly dislikes short sellers, recently suggesting on TV that they're addicted to drugs. "Almost nothing makes a human happier than taking the lines of cocaine away from these short sellers," he said. It was a tamer appearance than a few years earlier, when he used the word "f—ing" twice on an analyst call..Nevertheless, Karp has long sought one of Wall Street's most coveted prizes—a spot on the S&P 500, a milestone the data analysis giant officially achieves on Monday. The inclusion in the S&P means the company will be added to index-tracking funds held by major investors, officially establishing it in the corporate American firmament. Despite its more than $80 billion market cap, Palantir for years hadn't met the criteria for inclusion because of its tight founder control and unprofitability. Now, the S&P has relaxed requirements on multiple-class shares that can give founders supervoting rights, and the company marked its first profitable year in 2023..The addition to the S&P is the culmination of a winning streak for Palantir. One of the marquee companies of the artificial intelligence craze, Palantir has seen its stock almost quintuple since 2022. Karp is now worth more than $4 billion, according to the Bloomberg Billionaires Index..But that doesn't mean Karp is suddenly going to start getting along with stockpickers, many of whom dislike him almost as much as he dislikes them. Palantir declined to comment for this story or to make Karp available for an interview..Read more: 🔒 Palantir's secret sales strategy: No salespeople, just software boot camps.Of the 20 analysts covering Palantir, only five give the company a buy rating, and about one-third rate it as a sell, according to Bloomberg data—an unusually high number for an ascendant tech company. (Only 3% of Apple Inc. analysts give it a sell rating and 0% of Nvidia Corp.'s.) One reason for the reticence is a fear that Palantir's AI product could be overhyped. Some people think it won't be able to roll out its tools to corporate customers fast enough. And some don't like the company's leaders..Palantir's pavilion at the World Economic Forum in Davos, Switzerland, in January. Photographer: Stefan Wermuth/Bloomberg.Rishi Jaluria, RBC Capital Markets director, finds Karp's freewheeling and occasionally profane language on earnings calls grating. He also chafes at the use of the word "doctor" in Karp's title and at the fact that Palantir tends not to accept questions from him and other bearish analysts on earnings calls. (Karp has a doctorate in neoclassical social theory, not medicine.) "The CEO of Akamai is a Ph.D. No one calls him Dr. Leighton," Rishi tells Bloomberg Businessweek. "I mean, c'mon!".Karp, 56, has made little effort to act like a conventional businessman. He sometimes speaks at public events in a white T-shirt and is known for wearing boiled wool slippers in the office. He doesn't drive or own a car. His shock of curly salt-and-pepper hair suggests a recent encounter with an electrical outlet. And he does enough tai chi to be comfortable leading staff sessions in the ancient martial art..Karp has also been outspoken—and sometimes provocative—on political issues. He told the New York Times he's supporting Kamala Harris' presidential bid, but he's called wokeness a "central risk" to America that amounts to a "thin pagan religion." Karp has visited military leaders in Ukraine and Israel and has become a familiar face in Washington and at the Pentagon. He is publishing a book, The Technological Republic, set to be released in February 2025 by Penguin Random House, which describes it on its website as "a sweeping indictment of the West's culture of complacency.".Read more: 🔒 Top tech CEOs gather at Palantir's Davos talk on Israel attacks.Palantir markets its software to private and government clients working in areas like defense and immigration control, making it a political lightning rod. The company has won a range of recent government contracts, including for building out an AI platform for the military. At a recent confab for technologists and policymakers in DC, Karp urged historically war-wary Silicon Valley leaders to make tech tools with an eye toward national security, calling it a moral imperative as well as a financial opportunity. "This country is focused on using AI to have a structural advantage in how we deploy and understand the battlefield," he said. "And Palantir plays a crucial role in that arena.".The company's latest big release, which it calls the Artificial Intelligence Platform, uses AI to augment all of its functions, the company says. That promise has sent Palantir's stock skyward, up 111% this year—compared with S&P growth of just 18% over the same period..Karp at Palantir's FoundryCon event in 2024. Photographer: David Paul Morris/Bloomberg.Yet detractors remain, particularly as the sheen has come off some AI investments. Malik Ahmed Khan, an equity analyst at Morningstar Inc., says he believes in Palantir long term but has "lost some confidence in the management," especially for embarking on ill-fated investments in special purpose acquisition companies..The SPAC effort involved a quid-pro-quo strategy, where Palantir spent $450 million to purchase shares in about two dozen startups that had gone public. As part of the deal, those companies became Palantir customers. Many of the startups fizzled along with the SPAC craze, costing Palantir both revenue and investment value. In a 2022 earnings call, the company said that sales from those deals had "peaked" in the first quarter and that it "wound down" the program. But it didn't meaningfully address the issue again on an earnings call, frustrating some investors. "If you show an error in judgment, it's required that you more than compensate for it," says Khan of the blow-up. "I don't think they even said it was unwise. They just brushed it under the rug.".But Karp's tight grip on Palantir gives him little incentive to engage with critics. Along with co-founder Peter Thiel and President Stephen Cohen, he structured the company at the time of its public debut to ensure that, together, they have voting rights as long as they're still living..One investor class that Karp does seem to love: Palantir's enthusiastic online retail traders, whose support he says he relishes. Small armies of them have returned the favor, bestowing Palantir with near-Gamestop levels of reverence in the r/PLTR subreddit, named after the company's ticker. "PLTR to the f—ing moon! ????????" read one recent representative post. The main theme on the page lately is vindication, as the company's stock has continued to climb..In a video recorded shortly after Palantir learned it would begin trading on the S&P, Karp is featured running through the woods wearing spandex shorts. He pauses and speaks directly to the camera. "We've gone from what adults, professional managers and some analysts thought was a Frankenstein monster powered by a freak-show leader—me—to a dynamic, clearly profitable company worthy of and clearly admitted to the S&P 500," he says, gloved hands gripping hot pink trekking poles. "And we did it our way.".Read also:.🔒 Palantir shares dip after underwhelming sales forecastPalantir jumps 30%, most since 2020 on first annual profit, AI demand🔒 Apple's AI surge puts valuation at risk of outpacing reality.© 2024 Bloomberg L.P

Palantir’s CEO Karp defies Wall Street, leads AI surge to S&P 500

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