Investment analyst accuses Palantir of AI washing

Stick to data pipelines and ontology, says expert after share price dip

Spy-tech biz Palantir has overstated its claim to be a generative AI company, according to one investment analyst who thinks this might explain its recent slowdown in growth from commercial markets.

Speaking to Yahoo Finance, RBC Capital Markets software equity analyst Rishi Jaluria claimed Palantir was not the "cutting-edge generative AI company that they claim it to be."

Earlier this week, Palantir saw its share price dip despite posting on-the-nose revenue growth of 21 percent year-over-year to reach $634 million in the first calendar quarter. Revenue guidance was lower than expected and US commercial growth fell from 70 percent to 40 percent.

On an earnings call, CTO Shyam Sankar said Palantir was the only company to figure out how to get AI "beyond chat" by using its data ontology platform to take "unstructured inputs and turning them into structured actions and outputs that drive economic value in the enterprise."

On the same call, CEO Alex Karp said Palantir did not have AI competitors in the commercial or government markets. "I think that's the reason Ukraine and Israel bought our product. We are differentiated because in order to actually make AI work, you need an ontology. No one has an ontology," he said.

But Jaluria accused Palantir of playing to retail investors with its AI claims, which he reckoned did not hold water when real AI experts examined them. He also questioned the go-to-market strategy of using so-called bootcamps to build use cases for prospective customers in short cycles.

"When we talk to actual technologists who are deep into AI and machine learning … they are expressing skepticism around Palantir and especially around its Artificial Intelligence Platform (AIP) … and whether [Palantir] are what they say they are from an AI perspective. Maybe there's a little bit of that showing up in the US commercial numbers," he told the show.

Jaluria said Palantir's share price was not supported by its forward revenue and margins. Palantir's message that it is a "cutting-edge generative AI company … very deliberately targets retail investors," he said. All the same, Jaluria described himself as a "huge believer in AI" and those generative AI technologies would "change society as we know it."

"I just don't think Palantir is that cutting-edge generative AI company that they claim it to be. It is a good data pipeline. It is a good data ontology company. I'm not saying it's not a useful company, but it is not what they claim it is," he said.

Palantir has been offered the opportunity to respond to the analyst's views.

The analytics and data platform company was founded by Peter Thiel and received early finance from CIA investment arm In-Q-Tel. Its early successes came through government security contracts, working with the controversial US immigration agency ICE. It has worked with the US military on a number of contracts, including a $178.4 million deal to help build a battlefield intelligence system inside a truck.

It has also won a £330 million ($412 million) contract to provide the NHS Federated Data Platform (FDP) through a procurement process critics have described as uncompetitive. ®

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