Is Palantir more magnificent than the Mag 7?

“A Palantir is a dangerous tool, Saruman” – Gandalf, The Lord of the Rings.

In Tolkien’s fantasy saga, The Lord of the Rings, a Palantir was a mythical sphere that allowed the user to see and communicate over vast distances.

What made them dangerous is that you didn’t always know who was also watching on the other end. In the book, the antagonist, Sauron, uses a Palantir to corrupt and seduce others to do his bidding.

The NSADAQ is not a mythical place, although sometimes strange things do happen on it. It also has a Palantir (NASDAQ: PLTR ).

And, like Gandalf the Grey, some consider the Palantir in this realm just as dangerous, mysterious, and even seductive, as those found on Middle-Earth.

How to catch a terrorist

Palantir, founded in 2003 by famous entrepreneur, Peter Thiel, has always had an air of mystery around it.

When you consider that an early investor was In-Q-Tel, the venture capital arm of America’s powerful Central Intelligence Agency (CIA), and that it was rumoured to played a role in the US hunting down Osama Bin Laden, it’s easy to see why.

Its initial use case was to help the intelligence community in the US to assist in counterterrorism investigations.

So, with such deep roots in the shadowy world of intelligence, some opaqueness (and controversy) can be expected.

“What does Palantir actually do?”

Over 20 years later, a common question from investors about Palantir remains “what is it that this company actually does?”.

Let’s go back to its initial use case – counterterrorism.

In Palantir’s 2020 prospectus, it explained how one of its platforms, Gotham, helped analysts at defence and intelligence agencies.

“They were hunting for needles not in one, but in thousands of haystacks.”

Gotham allowed these analysts to find those needles by ingesting, cleaning and linking data (organising the haystacks if you will) to allow analysts to identify patterns and find insights (find the needles).

Palantir would then recognise how these tools could also be of use to commercial partners that also work with large, often unrelated, datasets – such as airlines, hospitals and insurers amongst others.

And although Palantir has expanded its product range, it still largely works the same way. Ingest data from multiple sources and organise it in a way so that its customers can quickly and effectively find the insights they need.

Future leader or overvalued?

Despite many investors being unclear on what the company does, it hasn’t stopped it from being a popular investment.

Over the past year, Palantir’s share price has rocketed up almost 380%.

Not a single member of the ‘Magnificent 7’ even comes close to such a rapid share price escalation.

However, with a price-to-earnings multiple of 554x, it has become a battlefield of diverse opinions.

Recently, US-based short seller, Andrew Left of Citron Research, made waves when he used Open AI’s recent valuation to highlight how overvalued he thought the current tech darling was. He argued that even a 75% fall to US$40 would still leave it overvalued.

But there are still bulls.

At the recent Livewire Live 2025 event, Australian fund manager, David Allen of Plato Investment Management named Palantir as a future leader that is at the cross roads of three big megatrends: defence, datafication and AI.

Both views have merit.

Just as famous astronomer Carl Sagan once said “extraordinary claims require extraordinary evidence” and so to do extraordinarily valued stocks require extraordinary growth.

However, there is no question that data is a valuable commodity and being able to make sense of it will be increasingly important to government organisations and commercial businesses alike and Palantir has forged ahead as a leader in this field.

One thing that I think helps those bullish on Palantir is the type of data it is being used to analyse.

With global government departments, militaries and intelligence agencies, as well as some of the world’s largest companies, the decisions that shape the world of tomorrow will likely pass through Palantir’s platforms.

As such, in 10 years’ time, if the growth continues, it could become one of the most powerful companies in the world. 

And that has to be worth something.