Palantir Holds $19

and Shyam Sankar explains why ontologies actually matter for LLMs

Palantir Held $19 Today, Surprisingly

I think most people, including myself, thought that $19 may not hold. We violently busted through $19 yesterday on a VERY green day for the market, and today ended up being red. However, within that red, we still held $19 and even reached a high of $20.24.

The price action going on with Palantir is nothing short of incredible. We saw some pretty big prints as well, orders for 200-300K shares, which could be buy or sells - but if they are sells, they weren’t big enough to knock the stock down dramatically. 98.9M shares exchanged hands today. That is WILD.

The level of interest in Palantir is growing day by day and it seems like there are dip buyers ready to gobble up shares, the low was $19.23 and that got eaten up as well. Q2 numbers ultimately will prove if the interest can sustain itself.

So…Should You Sell?

Let me tell a story that’ll help influence how I think about this since I’ve seen a lot of questions about selling and then anyone else please feel free to share your thoughts on this below in the comments.

So I got to speak to a fund that manages $100M here in New Jersey 2 months ago. This is when Palantir was at $7, the fund manager had been investing since $5 in 2018 and was even invited to Foundry Con. They’ve been long for a while. He brought me, a little YouTuber, to just get my thoughts.

I could tell the guy was pretty upset about the stock given he wanted to have a meeting with me. I have zero equity finance analyst background experience, I just like analyzing Palantir and hyper focus on it.

Still, he wanted to meet. He tells me that he’s really upset with the stock, was super annoyed we fell from $10 to $7 after the Q4 GAAP profit surprise, and just cant tolerate how annoying it is to be a shareholder and not see the results he wanted.

I heard him complain for an hour, he even ordered me a fancy sandwich and I ate the sandwich while he complained. Chicken parmesan sandwich in a big investment fund office with the AC blasting was a vibe.

So after listening for an hour, I asked him one question - “So why won’t you sell?” He smiled and said, “Because I believe in this company.”

From there the conversation turned more positive about the GIGANTIC opportunity he sees, and how he knew if the stock ran to $15-$20, he’d have to literally fight tooth and nail with his clients to not sell Palantir and hold for the long term.

I mean he’s literally telling me, “we’re gonna be begging these clients to listen to us even after they are up 4X and not sell when it’s $20.” Well… Now, even briefly, it’s $20. Their average was $5. A 4X sounds really cool. Buying at 10 and doubling sounds really cool. But if you believe in the true long term, selling at these levels, even if you think its insanely overvalued, is a tough thing to do for one reason: the potential of this company.

By now I am convinced beyond imagination on what the potential is — until that thesis breaks, and no Q2 being bad doesn’t break my thesis — I literally have zero reason to sell and capture gains because there are more gains to gain in the future by just being patient and ENJOYING the ride.

So like, sure taking profits is fine especially if you’ve got personal finance things to take care of or just wanna capture the gains, but if you wanna be in this stock…there is such a big future IF they execute, the execution is the risk, but its a risk worth taking. Especially with Alex Karp leading the company.

I wonder if that fund manager has sold for a 4X or is holding to give his clients a generational return. Given how much he hated the stock action but loved the company, I’d imagine he’d kick himself in the stomach for days if he takes a 4X when we are still worth less than other SaaS players like $SNOW.

How do you rationalize selling or not at this level?

For me it’s REALLY simple - it dips I buy, it goes higher I just continue to hold until the opportunity has been fully captured, which I feel has many years left to be captured.

Palantir’s CTO Breaks Down Palantir’s competitive advantage with LLMs

The Exclusive Interview: A Technical Insight

In an eye-opening recent podcast interview, Palantir’s CTO Shyam Sankar pulled back the curtain on the technology the company has been developing for the past 20 years. Unlike any other time, Sankar dives deep into the technical aspect, revealing the company's current strategies and its vision for the next two decades. You can watch my video on this here.

Palantir and Large Language Models (LLMs)

LLMs, known as Large Language Models, are revolutionizing how businesses approach data. By using artificial intelligence (AI) to analyze billions of data points, they can provide accurate results within milliseconds. This offers a massive opportunity to speed up growth, efficiencies, and productivity in almost every business sector.

However, to implement an LLM, a company must have valuable proprietary data and a robust AI infrastructure. Herein lies Palantir's golden opportunity. By becoming the de facto AI infrastructure company for millions of enterprises planning to use LLMs, Palantir stands at the threshold of an enormous business opportunity.

The Importance of Ontology

During the interview, Shyam explained the significance of ontology in achieving accurate results from an LLM. By ensuring faster time to value, ontology becomes the heart of a successful large language model. The three-minute clip that Sean shared emphasized the interplay between ontology and LLMs.

In essence, ontology offers a common foundation of truth for data. Whether structured or unstructured, siloed or not, ontology brings all data into one place, providing a meaningful structure that drives value for the business.

Shyam revealed that the decision to invest in LLMs occurred around Q4 of last year. The realization that LLMs were just waiting for something like ontology to unlock their true value created a wave of excitement within Palantir.

The company had spent 20 years thinking hard about dynamic ontologies and how they are valuable to humans. Suddenly, the world of LLMs offered a new avenue to build reliable functions and discover innovative solutions to complex problems.

Shyam likened an LLM to a "stochastic Genie," referring to the random nature of its output. The challenge for engineers is to create a toolchain that takes this randomness into account. Developers need to understand how many unit tests they need for an LLM-backed function and create health checks, calibration, and telemetry to ensure reliability.

Unleashing the Potential of AI

The integration of LLMs into businesses presents a "Gold Rush" opportunity, transforming companies and making them vastly more productive. The power of ontology and Palantir's AI infrastructure positions them uniquely to capitalize on this massive trend.

However, it's not all smooth sailing. Shyam cautions that an LLM can also be counterproductive if not grounded in the reality of a business. A wrong output could have catastrophic impacts on the business, such as ordering incorrect inventory levels or making poor hiring decisions.

According to Bloomberg, the market opportunity for Enterprise AI could reach $4.4 trillion by 2033. This places Palantir in a prime position to become a key player in the AI space. The combination of ontology tooling and infrastructure that Palantir offers could revolutionize how businesses operate.

Palantir's pivot towards Large Language Models, grounded by ontology, is a fascinating revelation. The interview with Shyam Sankar illuminates a future where the confluence of market opportunity, timing, and technology could give rise to revolutionary products and services.

With this strategic direction, Palantir is not only looking forward but also providing a glimpse into the potential transformation of business as we know it. The blend of ontology and AI could well be the key to unlocking productivity and success in the business world of tomorrow. Only time will tell how this ambitious vision materializes, but one thing is clear: Palantir is staking its claim in the promising future of Enterprise AI.

That’s it for today - as always, if you want to support you can gift a subscription for $8 a month or $80 for the year. I don’t paywall any content so any subscription just helps me keep doing what I’m doing. See you tomorrow!