Nurtured by the controversial Peter Thiel and led by the eccentric Alex Karp, the techies' favorite pick—undoubtedly the "meme stock" of 2025—is the subject of a cult following that transcends the canons of traditional finance.
For a while, this earned them a lot of sarcasm: Palantir was unprofitable, maintained a clever secret around the real nature of its activities and spent astronomical amounts on stock options; three years ago, these even reached 80% of its revenue.
However, the Houston-based firm has been delivering since H1 2024. It has significantly cut back on variable compensation, maintained its phenomenal growth rate, and finally balanced its books—better still, it has put them firmly in the black. Its stock has immediately reacted by skyrocketing.
If we take its financial results at face value, we have to admit that 2025 is an amazing year. In the first nine months of the year, Palantir's revenue increased by over 51% compared to the same period last year, from $1.6bn to $2.5bn; and operating profit before depreciation and amortization—or EBITDA—grew at an even faster pace, from $324m to $858m.
For the full year, with one quarter left, analysts overall expect net income of $1.1bn. In this respect, the current market valuation is equivalent—it's hard to believe—to 120x the group's revenue and 480x its net income expected in 2025.
To put this into perspective, Palantir now commands a market capitalization comparable to that of Mastercard or Exxon—two titans that may be growing at a slower pace, but are nonetheless generating profits - $15bn for the former and $30bn for the latter.
Palantir, meanwhile, continues to pile cash onto its balance sheet and now sits on a war chest of over $7bn. For the time being, there are no share buybacks—what would be the point at such valuation multiples?—nor dividends or acquisitions.
Beyond its commercial expansion—which continues in the private sector, accounting for 46% of revenue this quarter, compared to 44% last year at the same time—hoarding is therefore its management strategy for the time being.
Palantir continues, of course, to stir up short sellers. Among them, the famous Michael Burry, known for his bet against AAA-rated mortgages before the subprime crisis erupted, has concentrated the portfolio of his firm Scion Asset Management against the Houston-based company—and against Nvidia.
He is not the first to take this risk. But in a market that continues to defy the laws of gravity, those who preceded him have paid the price.
