Not too long ago, Palantir was suing the US Army for unfair contracting practices. Today, the Army is its biggest fan, its CTO is an Army Reserve officer, and the Pentagon is pumping billions into its software. The company has become so embedded in national security that some officials are whispering about a new problem: What happens when your most important contractor is also your most controversial one?

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Some numbers in the stock market just don’t make sense. They feel like a typo from a parallel universe.

Take Palantir Technologies. In early August 2025, its market cap rocketed past $370B. 🤯 That makes it more valuable than legacy defense giants like Boeing, which it now considers a competitor.

The stock has been on a bonkers tear, more than doubling this year and soaring an insane 550% in the last 12 months.

This performance has earned it a wild distinction: the most expensive stock in the S&P 500. Its forward price-to-earnings (P/E) ratio is a staggering 285x. For context, the average for a software company is under 50x.

Yet for every Reddit trader popping champagne, there’s a Wall Street analyst quietly losing their mind. The professional consensus is that Palantir is “significantly overvalued.” Morningstar, for instance, thinks its fair value is around $115/share, even as it trades near $170.

So what gives?

This gap between the hype and the spreadsheets is where the real story is. Palantir’s gravity-defying valuation is a cocktail of a cult-like retail following, AI-fueled market mania, and the careful myth-making of its eccentric CEO, Alex Karp.

Karp, for his part, loves the drama. After a blockbuster quarter, he told investors, "We are sorry that our haters are disappointed, but there are many more quarters to be disappointed and we are working on that too."

This defiant attitude isn’t a bug; it’s a feature. The meme-stock energy is a core part of Palantir’s business strategy. A massive valuation projects power and permanence, helping it land the very government contracts—like a recent $10B deal to become the US Army’s main software system—that fuel its growth.

In a bizarre feedback loop, the hype from the crowd fuels the machinery of the state.

You can’t understand Palantir without trying to understand its CEO, Alex Karp. Good luck with that. He’s less a CEO and more a bundle of contradictions stuffed into a Patagonia vest.

He’s a self-described socialist with a PhD in social theory who runs a company that builds software for federal deportations. He’s a wellness nut who practices tai chi and is also reportedly “highly skilled with handguns.”

His public statements are legendary. He calls short-sellers people who “love pulling down great American companies so they can pay for their coke.” He once mused about his "lower purpose" in life: "I love the idea of getting a drone and having light fentanyl-laced urine spraying on analysts who tried to screw us."

To grasp the full picture, just look at the two sides of Alex Karp:

This persona isn’t an accident; it’s a strategic asset.

Karp is the ultimate code-switcher. His progressive academic cred gives him a pass in liberal circles, while his aggressive, pro-military rhetoric makes him the perfect partner for the Pentagon. It allows Palantir to be all things to all people: a Silicon Valley disruptor to some, a trusted Washington insider to others.

Every great story has an inflection point. For Palantir, it wasn’t a killer product launch. It was a lawsuit.

Born in 2003 out of the PayPal Mafia, the company was the brainchild of libertarian billionaire Peter Thiel. The idea was to apply PayPal's fraud-detection tech to finding terrorists. He named it after the all-seeing stones from The Lord of the Rings—a name that’s equal parts nerdy and ominous.

The only early money came from Thiel himself and a crucial $2M from In-Q-Tel, the CIA’s own venture capital firm. Yep, from day one, Palantir’s DNA was spliced with the US intelligence community.

But its path to the big leagues came from an incredibly bold move: in 2016, Palantir sued the US Army.

The beef was over the Army’s next-gen intelligence system. The Army wanted to build a new system from scratch, a process that favored old-school defense contractors. Palantir argued this violated a 1994 law that required the government to at least consider buying commercial, off-the-shelf products first.

In a stunning upset, the court agreed. Palantir won.

This forced the Army to pit Palantir's software against a system from defense giant Raytheon. Palantir won again, landing an $876M contract in 2019.

That legal victory laid the groundwork for it to become the Army’s go-to software provider, culminating in the $10B deal announced this year. The lawsuit was a multi-billion-dollar marketing campaign disguised as litigation, shattering the Pentagon’s old way of doing business and establishing Palantir as the disruptive force.

Palantir's influence in DC runs deep. The company is becoming a core part of the government’s operating system, a process supercharged under the Trump administration.

A well-worn revolving door has placed former Palantir execs in top government tech jobs, including the federal CIO and key roles at the State Department and Health and Human Services (HHS).

This network is now bringing Palantir’s most ambitious project to life. Following a 2025 executive order to break down data silos between agencies, Palantir was chosen to build the tech to link them all.

Critics call it an “emerging super-database”—a single platform combining sensitive data from the DHS, DoD, IRS, Social Security, and HHS. Privacy advocates warn this creates a "digital ID" on citizens and is a "power that history says will eventually be abused."

The work aligns perfectly with the current administration:

In this relationship, the administration provides the political will and billion-dollar contracts. Palantir provides the powerful tools to make it happen. It’s effectively becoming a privatized arm of the state’s intelligence apparatus.

Herein lies the Palantir Paradox. The company pitches itself as a defender of "Western values," but its tech is constantly linked to authoritarianism.

Nowhere is this clearer than its pivot to the Middle East.

For years, Palantir’s big selling point was that it only worked with Western democracies. Now, it's chasing huge contracts in Saudi Arabia—a country it reportedly fled a decade ago over human rights concerns.

This reversal conveniently aligns with the administration's foreign policy and Saudi Arabia's reported $1T push into AI. Palantir is positioning itself to cash in.

It reveals a brutally simple business model: crisis and geopolitical shifts are Palantir's growth engine.

The company’s "values" appear to be less a fixed principle and more a flexible marketing strategy. The common thread isn’t ideology, but a laser focus on being the indispensable tech partner to American power, wherever that power shifts.

To the bulls, Palantir is building the essential “operating system for the modern enterprise” and the modern military. Its potential is limitless.

To the bears, it’s a dangerously overvalued house of cards, propped up by hype and dependent on a single political administration.

But the stock price misses the point. The real story is the blurring line between a public company and a state intelligence agency. Palantir is pioneering a new kind of entity: the "Platform State."

This is where a for-profit company provides the core infrastructure for government functions. The state itself becomes a client on Palantir’s platform. We're already seeing it with the US Army, which is consolidating 75 separate systems onto Palantir's software.

This creates a structural dependency that has some Pentagon officials worried. A traditional contractor sells a jet. Palantir sells the very system on which the government operates and makes decisions.

This gives a private company, with its eccentric CEO and profit motives, an unprecedented, quasi-sovereign power over the machinery of the state.

The palantíri of legend were a cautionary tale about how power can distort vision. The story of its corporate namesake is still being written.

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It's a very counterintuitive approach. The company is betting that managing the perception of the wait is just as important as reducing the actual wait time. The host role is designed to be a human buffer for a systemic, algorithmic problem.

-Matt

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