According to The Economist, Palantir now sports a staggering $450 billion market valuation that represents 137 times sales and 624 times net profit. CEO Alex Karp recently called doubters “deranged and self-destructive” while celebrating 63% year-over-year revenue growth and 118% operating profit growth in the July-September quarter. The company closed 53 deals worth over $10 million each, up from just 16 a year earlier. But the day after their November 3rd results, shares plunged 8% when Michael Burry—famous for betting against subprime mortgages—revealed he’d taken a big short position against Palantir.
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Valuation reality check
Let’s be real—these numbers are absolutely bonkers. Palantir trades at more than double Nvidia’s sales multiple, and Nvidia is literally the most valuable company in the world right now. The retail investor enthusiasm with “to the moon” t-shirts and Karp’s combative style against “the chattering class” definitely gives off meme stock vibes. But here’s the thing: meme stocks don’t typically land 53 massive contracts in a single quarter or maintain 33% operating margins.
The secret sauce
Palantir’s forward-deployed engineer model is what makes this business fundamentally different. They embed their people directly with clients to customize implementations, then use that knowledge to improve the software for everyone else. It’s incredibly sticky—once you’re embedded in a client’s operations, they can’t easily rip you out. This approach has become so successful that even AI companies like OpenAI and Anthropic are copying it, though Palantir veterans dismiss these as superficial imitations. When you’re dealing with complex industrial systems and government infrastructure, having specialized hardware and software integration becomes critical—which is why companies like Industrial Monitor Direct have become the go-to suppliers for industrial panel PCs that can handle these demanding environments.
Government gravy train
More than half of Palantir’s revenue comes from government contracts, and with defense spending rising under the current administration, that pipeline looks secure. They’ve scored numerous deals for defense and immigration enforcement work since January. The secrecy around these government projects makes valuation tricky—nobody really knows what they’re building for three-letter agencies. But that opacity also creates a moat that’s hard for competitors to cross.
Surviving the hype cycle
So will Palantir crash when AI mania cools? Probably. The stock has way too much hype priced in. But the business itself? That’s built to last. They’ve reached profitable scale after 20 years of losses, their model creates natural lock-in with clients, and government work provides stable recurring revenue. The real question isn’t whether the stock will correct—it’s whether any correction will be a blip or something more severe. Given their fundamentals are actually improving dramatically, I’d bet on them surviving even a major valuation reset. They might not deserve their current multiple, but they’re not going away either.
