Palantir Has a Vision of an AI-First World. Will It Make Investors Rich?

Palantir Technologies (NASDAQ: PLTR) has become one of the most popular stocks in the market. Like many such stocks, Palantir has been volatile, rising and falling with prevailing sentiment among market participants about the future of artificial intelligence. Yet with CEO Alex Karp at the helm, Palantir has ambitious plans to build on its past success and lead its clients into the AI era.

What investors need to understand clearly about Palantir is that the tech disruptor has firmly hitched its future to the AI bandwagon. This third and final article on Palantir for the Voyager Portfolio will take a closer look at exactly how the company expects to make the most of the opportunities it sees ahead of it.

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Explaining Palantir's rise

Karp is quite clear about the role artificial intelligence plays at Palantir. As the CEO sees it, there's now a clear division between those governments and businesses that fully understand what it will take to use AI most effectively and those that don't. Palantir's growth will depend on early AI adopters that in Karp's words "are now declining to pay for science projects."

Yet Karp is quick to note that a lot of people are pursuing the wrong avenues for AI maximization. As Karp puts it, "Large language models will not lead us to salvation." What LLMs need is some link to the real world that can ground their output in meaningful ways. Moreover, because modern governments and corporations are immensely complex, navigating across vast arrays of data infrastructure requires the expertise with datasets and analytics that Palantir has built throughout its history. Indeed, with Palantir's AIP, clients can migrate data from outdated silos to more accessible locations more quickly.

Promoting AI at the source

Some AI stocks have been quite content to identify a lucrative niche and stay there, but Palantir doesn't follow that playbook. Instead, it's aiming to be part of the core bedrock on which AI's foundations rest. In its most recent quarterly presentation, Palantir introduced Chain Reaction, which it sees as the operating system for AI infrastructure in the U.S. market. With founding partners Nvidia (NASDAQ: NVDA) and CenterPoint Energy (NYSE: CNP), Palantir wants to provide its software to the core industries that will make further AI advances possible.

To be clear, Chain Reaction will go well beyond the tech industry. Modernizing energy infrastructure will be necessary to take the aging electrical grid and make it capable of handling the massive power requirements of AI. Energy producers will need greater electrical production capacity at all hours of the day in order to keep AI running 24/7/365, while the construction and engineering companies that will be responsible for projects to build and expand generation and transmission assets will have to accelerate their efforts to avoid holding back the pace of innovation. Palantir also wants to play a bigger role in the buildout of data centers to support AI workloads.

The question Palantir will answer soon

The pace of Palantir's recent growth matches the appetite for AI development right now. Karp's vision is one in which hyperscalers and other major tech players will continue to spend trillions of dollars on investments related to artificial intelligence. If anything jeopardizes that exponential trajectory of future AI investment, then Palantir could face a major threat.

For the Voyager Portfolio, Palantir has already gotten too much attention to be an attractive under-the-radar candidate for investment. Also, the amount of text Karp includes in his shareholder letter on philosophy and rhetoric that's only peripherally related to Palantir's business signals a leadership style that's not for everyone. But for investors with different viewpoints who are willing to focus squarely on business fundamentals, Palantir stock stands to benefit greatly if the prevailing trends favoring AI continue unfettered in the years to come.

Dan Caplinger has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.