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How bad does the world need to get before Palantir is happy? In the sunny US tech sector, the software company stands out for its doom-laden warnings on global instability. Artificial Intelligence could be the crisis it was looking for.
These are high times for cynics. AI is being touted as dystopia in the making. In meetings with tech companies I keep hearing the phrase “Oppenheimer moment” — a reference to Robert Oppenheimer, the physicist who led the creation of the atomic bomb.
It is still not clear how exactly generative AI might destroy us, or what sort of fortunes it will create. But all this talk of awesome power is turning out to be extremely helpful for the value of a handful of companies. This week, AI chipmaker Nvidia’s market capitalisation briefly hit a trillion dollars. AI start-ups such as Character.ai and Anthropic keep raising money even as funding elsewhere dries up. Palantir’s share price has more than doubled in the space of five months.
This week, Palantir made its new AI platform widely available. The tool can generate conversational responses using the sort of large language models, or LLMs, that power chatbots like ChatGPT. Because it is grounded in customers’ specific data, it should avoid hallucinations — the false answers that plague other chatbots. A demo available on YouTube shows how it might work on the battlefield, helping to identify an enemy tank and offering suggestions on ways to target it. The company says Ukrainian forces are already using some of its initial features.
Palantir is not the only software company racing to show how generative AI can be used for something more productive than writing college essays. IBM has also announced a new AI platform called Watsonx. But IBM’s share price is down this year.
Palantir seems to be doing a better job than most of articulating real world uses. “You need a core set of technologies that allow you to bring these LLMs to your enterprise — to work on your data,” said Shyam Sankar, chief technology officer. “And then you need a really strong governance control layer that allows you to develop trust in AI.”
It helps that AI-style enigmas and existential threats are Palantir’s stock-in-trade. It’s hard to think of a company that talks more about disasters. Last year, it warned that the world was underestimating the threat of nuclear attack, which it pinned at about 20 to 30 per cent. Co-founder and Silicon Valley investor Peter Thiel is known for making his own spooky pronouncements on global annihilation. In 2008 he described what he called the re-emergence of an apocalyptic dimension to the modern world. While the 20th century had been “great and terrible”, he wrote, the 21st century promised to be more of both. Fears around AI fit perfectly into that worldview.
What does Palantir actually do? The $31bn company has sometimes been described as tech’s answer to management consultancy. It was created in the aftermath of the 9/11 attacks to build software that could be used by intelligence agencies to counter terrorism before expanding to other government departments and businesses. Its software combs through data, aggregates information, finds patterns and presents them in ways that are intended to be useful and easy to understand. It says its services have helped BP reduce production costs by approximately 60 per cent. It is also the frontrunner for a new seven-year NHS contract worth up to £480mn.
Over the past couple of years, however, Palantir has also been a somewhat cautionary tale of what can happen when a company known for working in the shadows steps into the light. Named after the dark, far-seeing crystal balls in the Lord of the Rings trilogy, it made a virtue of secrecy for a long time. The idea of an eerily omniscient tech company was irresistible to the media. In 2018, a Bloomberg article claimed the company knew “everything about you”. A couple of years later The New York Times asked whether it saw “too much”.
Chief executive Alex Karp has done a good job keeping Palantir’s eccentricities to the fore. He is known to be fond of German philosophy and has described his desire to work with creative, “wacky” people. When I was in the company’s Denver office, I saw a glass case displaying a drab office suit with a “break in case of emergency” sign.
Some of the glamour wore off when the company went public in late 2020. Suddenly it was subjected to the banalities of quarterly earnings reports and investors who want profits that meet generally accepted accounting principles. The awkward truth is that in 20 years, Palantir has never reported an annual profit. This is forecast to be the first year it breaks that spell.
Interest in AI has given the company back its mystique. Add newfound profitability and the result is share price commotion. It helps that the zeitgeist is catching up to Palantir’s way of thinking. If AI really is hurtling us towards oblivion, don’t expect Palantir to act surprised.
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