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Do you think the other person is a fool? Loch—it's you. You are the same sucker. And it will be nationalized simply because of the liability issues they are talking about . Like a delay. It's a little crazy. There's only one way when you have unlimited liability: the only way out is to go to the government and say, " We'll give you 50% of our business." Of course, the value of the business will initially collapse when you do this.
It will collapse again when you have people on the board of directors. It will collapse again. All of us...It could even bring down the entire market. These businesses should be nationalized, because if you don't nationalize them, every one of my clients will sue. Palantir's Karp basically just told us that he thinks that big- model companies like Anthropic and OpenAI are being invested in right now only because investors are greedy, thinking that OpenAI and Anthropic will get all this data from all the other companies.
But Karp actually says that the number of lawsuits this would lead to would destroy OpenAI and Anthropic. These businesses should be nationalized, because if you don't nationalize them, every one of my clients will sue. Do you think this is what they want? Well, obviously, if you have a business that involves unlimited risk, both in terms of liability risk and in terms of customers, because I don't think any of our customers realized that their intellectual property was migrating around the world, because you say, " What is the liability risk of destroying 10% of the company?" 10 and 10% of the world.
How do you discount that to date? Um, this liability you're talking about, how is it spelled out in the S-1 form? What do risk factors sound like? That's the thing. You assume there will be an S-1 form. Well, I don't... Okay, maybe she will. The only way to deal with this kind of responsibility is to go to the government and say, " Nationalize us, please." You know, often in business people don't say directly what they want.
They lead you to a conclusion. The reason people don't get it, again , is that every investor, and there are a lot of people who think they're going to make money, they're like, "Oh, businesses are suckers." What is the first lesson in poker and in life? If you think the other person is a fool, then you are a fool.
You are the same sucker. And it will be nationalized simply because of the liability issues they are talking about . Instead, they need to be nationalized. Literally, Karp just told us that we should nationalize OpenAI and Anthropic because there's too much responsibility attached to them. And the only way to avoid the liability that OpenAI and Anthropic have is to nationalize them or use Palantir.
Which was essentially a 26-minute marketing video about why you should use Palantir . Now let's try to sort through all this to understand what is reasonable. First, it's helpful to understand a little bit about how Palantir works and how they position themselves as special. So, I drew this on the board .
I think this is a very simplified example of what they do. But essentially, you have, uh, an early Palantir that studies language and heuristics. Then at the next level you get something like an ontology. We are going to combine data with algorithms and deterministic solutions. And now we are implementing LLM.
And these three things are different: language understanding, our weights and models, and how we interact with LLM. These things are completely different. Together, Palantir calls this sovereign AI. Palantir says: instead of just giving away all your stuff, instead of taking everything you have and putting it into something like Claude.
When you use a closed model and pay for tokens, you ...The reason why tokens are discounted is not so they can expand the market. They ...They're discounted so they can access your intellectual property to make their models better. And there was actually no honest conversation about it or disclosure .
So, this is point one. Point two: without the applied level and without the post- training that is currently being done with open models, you are in a classified area, it just takes off all over America because it is cheaper and as a result safer, and you control your future and your present. Uh, you're actually outsourcing value.
By the way, this is very closely related to security issues. Which, to be fair , is essentially what Salesforce does, right? Salesforce now allows people to access all of their Salesforce data through Slack or through Claude in a headless way. Slack is obviously their product, so it's less important, but you can essentially just talk to Claude and access all your data in Salesforce.
Actually, and I was n't even planning on mentioning this, but they just held a Dreamforce event. And at the Dreamforce event, Dario literally said exactly that. I'm going to open it. While I'm opening this, it's worth noting that Karp is blunt: what's happening will essentially destroy companies like Salesforce.
This is what will lead to large-scale lawsuits. And when these massive lawsuits start, don't be surprised if the government steps in as a last resort for OpenAI and Anthropic, because you can't take that many lawsuits—you're done for . I think there's a bit of a marketing calculation involved in what's happening.
I want to be clear, okay? We'll talk more about Palantir's valuation later, but I think part of it is just marketing. Benioff, what other... You teach them well, Mark. You teach well . That's right. People moved from Salesforce to Anthropic. best for helping the whole industry, you know. I judge myself by how many CEOs, COOs, and CROs at other companies have come from Salesforce.
You are doing this just fantastically. No, it's true. This is literally to Karp's words. At Anthropic, they're not just taking your intellectual property, they're taking your people. And Benioff is like, "You know what? It's so common now. It's just a sign of success." Although, ironically, how long will that last, right?
And regarding the CCO you mentioned: Paul wakes up every day and if he wants to look at our top prospects , he still uses Salesforce, but he works in it through Claude. He chats with Claude using Salesforce data about what the top 10 deals we're closing this week are. What are the 10 deals we are most likely to lose?
What are the themes in these agreements? How do we win these deals? You know, just freely using all the information with Claude. It's truly incredible, and the number of people who have seen that it's possible has so far been small compared to those who could benefit from it. Actually, this is exactly what Karp is talking about.
The executives at Claude say, "Hey, we have Salesforce sales data, but we don't even go into Salesforce anymore. We just talk to Claude." So you slowly suck everything you need, like a vampire, out of these companies, like Benioff's companies, just by using Claude's capabilities. Karp's argument is that these companies will be sued for the market value they are destroying around the world.
In other words , Claude and OpenAI will be sued. And so they will have to be nationalized, because the situation could become very bad. He says it could actually bring down the entire market. The entire economy could collapse due to the liability these companies face by giving their intellectual property to Claude and OpenAI.
Karp now argues that this fear mongering is realistic and that you should just buy Palantir because it is undervalued. Here's my opinion on all of this. And, in reverse order, I really think Palantir is n't that expensive right now. I'll go into detail , but I want to point this out right away. And I like Palantir stock.
I would buy more Palantir shares. I have some Palantir stock. Do I think OpenAI and Anthropic will be nationalized, and all of this will create liability that will crash the market? This is a bit crazy. When you have unlimited liability, the only way to deal with it is to go to the government and say, "We'll give you 50% of our business." Of course, the value of the business will first fall when you do this, then fall again when you put people on the board of directors, and fall again.
Maybe it will even collapse the entire market, but this is the path you are essentially taking, although, again, you have to look at the philosophy of it. Again, this is where investors made a big mistake due to their greed. A little greed is great, but they didn't mind when intellectual property migrated from each business to the structure they owned.
But the next step is, obviously, to take that value and transfer it to the government. But that would never happen to me . And again , this is where I have enormous respect for people like that, because he thinks ethically according to his ethical model. He doesn't just think about finances. This is what made him such a great business leader.
This is the reason why the best engineers and researchers want to work for him. This is the reason why he rose from fifth place to first. No, I don't think so. I think this is a convenient fear mongering on Karp's part to sell Palantir products. After all, Palantir uses its experience working with the military to say: we are so professional that we do not disclose military secrets, so trust us with your corporate data instead of Claude or other systems.
To be fair, there are cleaner ways to store data through Palantir's systems on their own servers, so you can protect the data but still pay Palantir their fees. Palantir has a lot of engineers on the front lines who will set everything up for you. That's reasonable. The system is really smart. But you have to balance this fear-mongering and apocalyptic predictions with the fact that he's simply trying to sell his product.
And Sarah Eisen bought into it completely. She says, "Oh yeah, you can't have security problems in the government, so you have to be very reliable." I was hooked. She completely bought into Karp's marketing. He is a smart guy. He knows how to get 25-26 minutes of airtime on CNBC. Who gets such a long segment on CNBC if they're not telling you that the world is ending , OpenAI and Anthropic are being nationalized, all their investors will lose money, and you should buy an undervalued company like Palantir instead?
This will get you 26 minutes on CNBC. Oh, he got 26 minutes with Sarah Eisen. That's right. But let's look at the other things he said and look at Palantir's valuation. So, he claims that these companies are undercutting token prices to steal your intellectual property. What you need is a good applied level like this board, right?
To protect your data. It's a kind of marketing strategy. Their thesis is basically this: we deserve all intellectual property. All these customers will lose money and then sue. I wrote about headless CRM as an example. He didn't remember that part. This will simply destroy market capitalization and cause a lot of liability.
He even makes Sarah Eisen say, " Oh, well, that's going to lead to a lot of responsibility." So she steps in and says it herself. But in any case, sensible recommendations are needed. The first line of defense is accountability, but you won't get that protection until you're nationalized, as he claims.
He argues that when the nuclear bomb was created , people were not working for a salary and were not focused on the profit incentives that could be obtained from an IPO in Anthropic. I don't think it's a coincidence that this comes a month before Anthropic's IPO, this call to "better buy Palantir." But, ultimately, business is the target.
You, well, companies—that's the market, you're the target, that's how he criticizes companies with intellectual property. And so, we already understand the idea. To be fair , the company has fantastic financial performance. I mean, just a quick overview: we have, well, about $9.4 billion of free cash flow after paying about $500 million in bills .
They have a great balance. In addition, their income increased by 92%. Their expenses increased by 53%. They have enormous pricing power. So, even if he seems like an arrogant , panic-mongering scoundrel, he has earned his audacity to some extent, because the company really does make a lot of money.
They are very selective about their customers. Many people would dream of using Palantir software, but there is a queue of people who want it but ca n't get it. As a result, their growth rate has actually increased since our last analysis. On average, it looks like everything has been revised a bit.
It is actually quite stable, at around 47%, in line with Wall Street expectations. That gives them a PEG ratio of about 2-3 at the moment, which is the price-to-earnings-to- growth ratio, because their P/E ratio, to be fair , is, well, what do we have here? The shares are worth 177/162. Their P/E ratio is around 109.
And if you divide that by 47% average annual growth over the next 4 years, you get a PEG of around 2-3. According to my projections, they will probably grow by 50% over the next 4 years. At a price of $162, I personally believe they could justify a PEG closer to three. This is probably a $250 stock.
So, we cannot justify a fivefold growth with current figures. But I don't think this stock is fully appreciated. So I don't think he's wrong to call Palantir undervalued, given their growth. You can't say it's undervalued based on P/E alone. But the pricing power is great, the balance is great, and the dynamics are not bad.
They've had a small increase since we bought it at 118. We sent out a notification to all alpha members about this. If you are not yet a member, of course, join us at meetreinvest.com. You get an alpha membership, plus probably six hundred or a thousand dollars worth of additional value for the Reinvest terminal when it comes out in November , so you get a free bonus.
We're going to raise the price on Friday night for meet reinvest alpha membership , so join us at meetreinvest.com. But I, you know, we sent out a buy notification for 118. Of course, we're in the black because of that. Although I wouldn't mind buying more at this price. Not because of this pessimism, because if you really believe he's right and everything will lead to a market crash, then why buy stocks at all ?
So I consider this an exaggeration and marketing hype for Palantir. He says, "Oh, Dario—an ethical man ." It's like what comedians do. You know, comedians do that. They say, "Oh, Jews are the best in the world. I have the best friends. Jews love me." And then they make some joke to make fun of Jews, right?
This is, in fact, what comedians do. That's what he's doing here. It's like, "Oh, Dario is great. Dario is great. But he's being nationalized, and he doesn't see it. He doesn't even understand that he's a victim." But they are not yours. Let's say they had some kind of security incident, right? Something went wrong with the brakes, you know, something in the manufacturing.
Now, you believe you have the best safety record in the industry. What are you doing? How do you feel about this ? Of course, it's very tempting to attack a competitor and say that these guys are dangerous or safe. But this is an important point. Dario is going to develop this idea: " Hey, we're doing everything we can for safety, this, that, or something else." " But what's really interesting is that Dario seems to be responding to the comments he gets from people like Palantir, even though, or like Karp from Palantir, even though he says, 'Oh, I like Dario.' He is so smart.
Oh, but they'll all be nationalized, they'll depreciate, and their investors will lose a lot of money ." This is Dario fighting back with the words: "You know, we are criticized, but we do everything we can ." "But I think it's worth soberly assessing what it is ." This is a good company. This is a company that makes great money.
They have a right to be arrogant to a certain extent, but to say that the entire market will collapse and these companies will be nationalized is too much. I don't believe it. I think it's fair to say, "Hey, we need to work on making sure our opponents don't get ahead of us." You're annoying, you're going to get 50 times richer, and we're not happy with that.
Then these decisions will only help our opponents. Is n't that right? If we over- regulate AI now, China will overtake us. This is the main topic of discussion right now: we cannot allow China to get ahead of us, and he agrees with that. I think that's a more balanced point of view, but for the first 12 minutes of the interview he said that the market was going to crash and everything was bad, and the last minute he said that we simply cannot let China get ahead of us.
So, it took time to come to my senses. But despite all this, you know that the coupon expires tomorrow. It's called WashisBalls an.
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