January 30, 2026 | Palantir Technologies is a Risky and Controversial Company

Palantir Technologies is one of the most valuable companies in the U.S. stock market—and one of the least transparent.

Investors are clearly smitten. The shares are up 133% in the past year, pushing Palantir’s market capitalization to roughly US$400 billion. Yet annual revenues are about US$4 billion. That implies a valuation of 100 times sales, a level rarely seen outside the peak moments of speculative manias.

Does Palantir deserve such a lofty valuation?

The honest answer is that we don’t have enough information to know.

About 56% of Palantir’s revenue comes from U.S. government contracts, primarily in defence and intelligence agencies such as the Central Intelligence Agency. By design, much of this work is classified. Investors are therefore being asked to place enormous trust in a business they cannot understand.

In broad terms, Palantir sells “data management and data science” software to governments and large enterprises. In practice, it focuses on a small number of very large customers, each accounting for a meaningful share of revenue. The U.S. government remains the anchor client.

Palantir’s roots are in military intelligence. The company was founded in the aftermath of the September 11, 2001, terrorist attacks with the explicit goal of helping U.S. agencies identify terrorists and prevent future attacks. Its software is widely regarded as exceptionally powerful for surveillance, policing, and intelligence analysis.

The company’s founder, Peter Thiel, owns roughly 3–4% of Palantir, making him a billionaire on this holding alone and contributing to an estimated US$27 billion net worth. Thiel is known for his libertarian views and his skepticism toward democracy. He is a major backer of Donald Trump, a close associate of Elon Musk, and the principal intellectual and financial sponsor of J.D. Vance.

There is a striking irony here. Thiel is deeply distrustful of government, yet more than half of Palantir’s revenue comes directly from government contracts.

Palantir is now attempting to diversify into commercial markets using artificial intelligence. In late 2023 it launched AIP (Artificial Intelligence Platform), aimed at large enterprises. The company’s long-term investment case increasingly hinges on whether AI can materially expand margins and earnings.

That bet remains unproven. Even three years after the launch of ChatGPT, there is still limited visibility on how AI translates into durable profits at scale.

Meanwhile, Palantir continues to win defence-oriented contracts. Recent awards total over US$1 billion; many tied to military AI applications. In May 2025, the company also received a small contract from Immigration and Customs Enforcement to build software used to track immigrants.

This is a company with a controversial business model, rooted in secrecy, operating at the intersection of surveillance, defence, and AI—and trading at a valuation without precedent.

The risk appears every bit as large as the price investors are paying.

Hilliard MacBeth

Hilliard MacBeth January 30th, 2026

Posted In: Hilliard's Weekend Notebook

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