Palantir: Absolute 'scarcity' is investment value.
If we were to list the beneficiaries of the generative AI revolution, for a long time, the names on the list were only those of upstream and downstream enterprises—nuclear power companies providing AI-accelerated computing functions, companies producing and designing chips, etc. However, reliable investment targets were hard to find on the application side of AI large models; even if there were any, it was difficult to believe in their capabilities.
But now, as Palantir continues to release earnings that exceed expectations, market expectations for AI applications are gradually heating up. As an AI company initially led and funded by Silicon Valley heavyweight Peter Thiel, it first made its name in the field of military big data analysis and decision-making. In 2011, the company gained widespread fame by using big data to help the U.S. military successfully locate and eliminate Osama bin Laden.
Today, the company's capabilities are no longer limited to military and big data analysis. The emergence of the AIP platform has allowed them to effectively integrate the capabilities brought by large models, offering richer and more diverse products.
In the third quarter of this year, the company reported revenue of $726 million, a 30% year-over-year increase, exceeding market expectations. Net profit reached $144 million, a record high, while Non-GAAP earnings per share stood at $0.10, also above market expectations. As a result, the company's stock price surged over 14% in after-hours trading, reflecting strong market enthusiasm for these results.
From a regional revenue perspective, the company primarily operates in the U.S. market, generating approximately $500 million in revenue, accounting for over 68% of the total. In terms of revenue sources, 64% of U.S. revenue comes from the government ($320 million), with the remainder from commercial companies ($180 million). The core driver of growth was the U.S., where revenue skyrocketed by 44% in Q3.
Within U.S. revenue growth, commercial revenue increased by 54%, while government revenue rose by 40%. Commercial revenue has now become a key growth driver. This logic is easy to understand: technologies tested in real battlefield conditions typically offer higher security and accuracy than those used in everyday commercial applications, as the cost of failure is human lives rather than mere economic losses.
In the U.S., the vast majority of defense and defense-related business is provided by private enterprises. When these companies choose partners, their requirements are highly specialized, making it unlikely they would turn to non-industry players like OpenAI. Therefore, a significant portion of so-called "commercial revenue" likely comes from defense industry companies.
By the same logic, it’s reasonable to assume that a substantial portion of the company’s overseas revenue (about 32%) also comes from government and defense enterprises. At this point, we can define the company as follows: an AI large model company with core capabilities in military AI, competitive barriers rooted in government defense collaborations, and a strong reputation that attracts defense firms and allied governments.
In the entire U.S. stock market, Palantir is the only company of its kind. With over 20 years since its founding, it possesses strong scarcity and technological barriers.
Backed by solid fundamentals and the unstoppable AI trend, the company has provided Q4 earnings guidance far exceeding market expectations. Full-year revenue is projected to reach $Palantir Tech(PLTR.US) $L3Harris Tech(LHX.US) $Microsoft(MSFT.US)
Finally, regarding AI, the pace of application evolution is far faster than most imagine. During earnings season, we discovered a utility tool called "Simple Note," developed by Baidu Netdisk, a subsidiary of China’s leading large-model company Baidu. This audio transcription tool helped us quickly transcribe earnings call documents, significantly improving our coverage efficiency.
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