Karp joins ’ list of the richest Americans for the first time, thanks to his data mining firm’s massive year.
By Phoebe Liu, Staff
In an official video posted on Palantir’s YouTube channel in September, CEO Alex Karp jogs through a forest in biker shorts holding hot-pink poles, a mic clipped to his shirt.
“People do not completely comprehend how we could have turned a switch and 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 admitted to the S&P 500,” Karp, 57, paused his trail run to say. “And we did it our way … the rebels won.”
Karp certainly did win. Palantir, which builds software to help other businesses gather, manage and analyze their data, at first with secretive government agencies like the CIA and now also with commercial customers in a wide range of industries, had a banner year. Palantir took off, with annual revenue increasing more than 20% over the last year to $2.5 billion, and it flipped the switch on profitability—going from a net loss of $50 million in June 2023 to net income of $400 million a year later. The record year was capped by its addition to the S&P 500 in September.
The company’s growth is in part because many of its data software products meshed with the wave of AI hype. “Palantir has been building this technology that is the great way to operationalize AI for 20 years now,” says Bank of America Merrill Lynch analyst Mariana Pérez Mora, emphasizing Palantir’s success doing so for large, complex organizations like governments. “AI was a huge catalyst.”
We face increasing global disorder. We founded the company and built our products to combat a disordered world, and we think we’re made for this moment.
No surprise then that shares are up 134% over the past year, making Palantir the most expensive stock in the S&P in terms of revenue multiples—more so even than chip design darling Nvidia. Palantir’s meteoric rise has earned Karp a spot on The 400 list of richest Americans for the first time, worth an estimated $3.6 billion, thanks to his Palantir stake and $1 billion or so in cash from stock sales as of September 1, the day we finalized net worths for our list.
Karp, the philosopher-turned-entrepreneur, chalks up his and his company’s success to its belief in the “production of truth,” writing in an email to that Palantir’s software “provides a single source of truth: a view, unvarnished, of an enterprise’s entire ‘being,’ how all its people, assets, and actions connect to each other.”
And Palantir has plenty of room for growth, he adds: “We face increasing global disorder. We founded the company and built our products to combat a disordered world, and we think we’re made for this moment. We’re just getting started.”
Sky-High Valuations, Spirited Shareholders
Palantir is trading at a valuation much higher relative to its financials than the biggest tech companies and the consulting firms it competes with, thanks in part to a loyal army of retail shareholders. Based on a revenue multiple, it’s more expensive than any other company in the S&P 500. Multiples are based on September 30 closing prices and financials from the year ending in June 2024.
Born in New York and raised outside Philadelphia by a pediatrician father and artist mother, Karp has always prided himself on his inability to fit neatly into a box. “I’m a Jewish, racially ambiguous dyslexic, so I can say anything,” he told The New York Times in August from his $1 million home in New Hampshire, adding that he has nine other “ski huts” across the country. He attended Haverford for his undergraduate degree, went to law school at Stanford (where he met Palantir cofounder and and fellow 400 member Peter Thiel), then earned a doctorate in neoclassical social theory from Goethe University Frankfurt, where he wrote a dissertation on aggression’s role in social integration.
In a surprising move from a recently-graduated doctor of philosophy with no tech background, Karp cofounded Palantir in 2003, alongside Thiel, Stanford computer science grads Stephen Cohen and Joe Lonsdale and former PayPal engineer Nathan Gettings, with a mission to “help intelligence agencies make better use of their data securely and responsibly.” Palantir also has an explicit mission to support Western values and American defense, something Karp is not shy to discuss. “We stand unapologetically with America and its allies,” he wrote in his email to , emphasizing a sole commitment to “our partners’ success in business and on the battlefield.”
The company’s first funder and customer was the CIA, and Palantir operated primarily in the intelligence space until around 2010, when JPMorgan became its first commercial customer. Over the years, it’s continued to focus on uber-large customers and today has some 600.
Public-Private Partnership
Palantir’s revenue is growing at more than 20%, with revenue from government customers making up just over 50% of its total each year. Although more competitors are entering the market for government contracts, Palantir is still winning noncompetitive contracts, according to analyst Mariana Pérez Mora.
“Very few companies are both growing at more than 25% and have more than 25% margins,” says D.A. Davidson analyst Gil Luria. “That’s what puts Palantir in rare air.”
But should it be that expensive, trading at a market valuation that’s 36 times its annual revenue? Analysts aren’t sure: only five of the 20 that cover Palantir give the company a “buy” rating, with the remainder split between hold and sell ratings. Raymond James analyst Brian Gesuale downgraded his rating from a buy to hold early last week, writing in a note to investors that Palantir needs to “grow into its rich valuation.” Still, Pérez Mora remains optimistic, saying that some software analysts approach Palantir with too much of a software angle rather than a defense contractor angle; she values it based on free cash flow rather than sales volume. Based on Pérez Mora’s projections for future free cash flow, Palantir’s valuation becomes much more reasonable and in line with its competitors’ valuations, she says.
Of course, even though Palantir is named after an indestructible crystal ball in Lord of the Rings, no one knows whether its share price will continue to soar. Karp—and cofounder Thiel, who is $3.3 billion richer this year largely thanks to his Palantir stake—are taking some shares off the table. Since January 1, Karp has sold more than $300 million (pre-tax) worth of his Palantir shares; Thiel has offloaded more than $1 billion worth of his.
Luria drew a parallel between the company and Tesla and CEO Elon Musk, when the EV company was trading at all-time highs in 2021. “Tesla for a very long period of time traded well above any valuation or comparable metric that you could point to. The reason was people were really excited about the mission and about the prospects.” (Today Tesla shares are 40% below their 2021 peak.)
Karp’s mission-centric leadership to uphold Western values and help America in the era of information-fueled defense—approximately half of its revenues come from contracts with the U.S. military—makes Palantir more uniquely valuable and less sensitive to financials, according to Pérez Mora and Luria.
And while the cult of personality around him (a search for “Daddy Karp,” his nickname on the meme-filled Palantir subreddit, returns hundreds of results) and around Palantir isn’t yet as big as that around Musk, the world’s richest person, it’s helping keep Palantir shares high and pushing Karp further into the spotlight.
As Karp told in 2013, “One of the things I find really hard and view as a massive drag … is that I’m losing my ability to be completely anonymous.”
