What Does Palantir Actually Do? A Deep Dive into Gotham, Foundry, Apollo, & The Company's Unbelievable Valuation Growth
5-8 minute read
Author: Tucker Massad
Published October 1, 2024
If you've ever tried to explain what Palantir does in a few sentences, you probably found yourself trapped in a web of vague corporate-speak about "data-driven decision-making" and "AI solutions at scale." While the hype around Palantir is strong, especially in financial circles, understanding the specifics of their offerings can be a bit tricky. Let's break it down into digestible pieces and dive into their core products: Palantir Gotham, Foundry, and Apollo.
#Gotham: Your Friendly Neighborhood Spy Software
Gotham is Palantir's flagship product for government agencies, particularly in the defense and intelligence sectors. This isn't your typical data platform—it's built to handle the kind of massive, disparate datasets that government agencies deal with daily, ranging from satellite imagery to text documents to social media chatter. Gotham's primary value is in data fusion, meaning it's a pro at taking a zillion sources of unstructured data and turning it into something coherent, often to identify threats, track targets, or uncover shady networks.
Who's Using It? The U.S. Department of Defense, FBI, and various other global defense and law enforcement agencies are Gotham's biggest clients. For example, the U.S. Special Operations Command (USSOCOM) has used Gotham to improve decision-making on the battlefield by identifying patterns from intelligence data and using it to inform military operations. The platform's ability to link seemingly random pieces of information is why it's so loved by spooks and soldiers alike
Image: Palantir's Gotham Platform
Use-Case in Action: Let's say an intelligence analyst is tasked with finding out whether a suspected terrorist has ties to certain financial institutions or other persons of interest. Gotham will aggregate data from bank records, phone metadata, and even social media posts, then cross-analyze all of that to create a map of connections. In short: if someone is up to no good, Gotham's going to help find them.
#Foundry: Corporations' Best-Kept Secret
While Gotham is the darling of government agencies, Foundry is Palantir's play in the commercial world. Foundry's pitch is simple: "Let's turn your messy, siloed corporate data into something useful." It helps businesses centralize all their data, clean it, and analyze it for insights that go beyond standard reporting.
Who's Using It? Foundry is used by a wide range of industries, from airlines like Airbus to pharmaceutical companies like Merck, and even oil and gas firms. These companies often have vast amounts of operational data that's hard to make sense of, and Foundry's strength lies in integrating this data and allowing users to build and tweak machine learning models for better decision-making. Airbus, for instance, uses Foundry to optimize its manufacturing processes, which means better planes and fewer delays
Image: Palantir's Foundry Product Overview
Use-Case in Action: Imagine you're managing a complex supply chain for a multinational corporation with thousands of moving parts. You need real-time updates on inventory, shipping, supplier reliability, and customer demand—all of which are stored in different systems. Foundry pulls in data from all these sources, merges it into a single interface, and lets you build predictive models on the fly. So, instead of dealing with a bunch of spreadsheets, you've got a sleek, AI-powered dashboard telling you exactly when your next shipment will hit a bottleneck.
#Apollo: The Invisible Infrastructure
Apollo is the behind-the-scenes workhorse that powers both Gotham and Foundry by handling the nitty-gritty of software deployment across complex environments. If Gotham and Foundry are the shiny sports cars, Apollo is the well-oiled engine under the hood. It allows for updates to be pushed to software that's running in even the most restricted or remote locations, such as government satellites or secure military bases.
Who's Using It? Apollo is used mainly by organizations that have mission-critical software that can't afford to go down. Think defense contractors or companies with global infrastructures. For instance, Apollo ensures that when there's a software update for drones being used in a military operation, that update rolls out smoothly across all devices—even in hostile environments
Image: Palantir's Apollo Web Application
Use-Case in Action: Let's say a military drone fleet is running software that needs a critical update due to a new security threat. Apollo will handle deploying that software update in real time across all systems, without causing any downtime or exposing the network to vulnerabilities. It's like the unsung hero of DevOps—doing all the heavy lifting without anyone really noticing.
#Palantir's Market Cap: Some Serious Coin for a Company That Speaks in Riddles
So, $83.31 billion—let that sink in for a moment. That's where Palantir's market cap stands as of September 30th, 2024. For comparison, you could buy an entire airline or two with that kind of cash. But the real question is: does this valuation reflect what Palantir is actually delivering, or is it more a reflection of hype around buzzwords like AI, machine learning, and data integration?
Palantir's most recent revenue numbers tell an interesting story. As of Q2 2024, the company posted $533 million in revenue, a 12% year-over-year increase, with adjusted free cash flow at $96 million. Not bad. But here's the kicker: the vast majority of their revenue still comes from government contracts. In fact, approximately 56% of their revenue in 2024 came from government clients like the U.S. Department of Defense, the NHS in the UK, and law enforcement agencies across Europe. The commercial side of the business, while growing, still makes up less than half of their income.
That government reliance creates a certain risk profile—government budgets are notoriously fickle, and contract renewals aren't guaranteed. So, while Palantir is deeply embedded in high-stakes projects, if just one major contract gets cut, it could have a significant impact on their bottom line. Investors are essentially betting that Palantir's commercial business (Foundry, in particular) will continue to scale rapidly and diversify their revenue stream.
Here's where things get a little tricky: Palantir hasn't been the fastest to scale its commercial offerings. While companies like Salesforce or Snowflake have captured large portions of the corporate data market, Palantir's commercial revenue growth has been slow, even after years of investment. Sure, they're landing big names like Airbus and Merck, but these wins haven't translated into the explosive revenue growth many investors expected.
So, why the lofty valuation? A lot of it boils down to the potential of Palantir's AI capabilities. In Q2 2024, the company touted that 60% of their customers are using Palantir's AI-driven tools, and they're integrating AI across almost every aspect of their business—from national security to healthcare. The buzz around AI, combined with Palantir's reputation as a black box of innovation, has undoubtedly pumped up their stock price. But we've seen this story before: companies riding high on buzzwords until reality sets in. AI is great in theory, but the real-world ROI for many AI applications remains uncertain.
Now, let's talk about the elephant in the room: the mystique. Palantir's reluctance to explicitly lay out what their products do can be both a blessing and a curse. Investors love the "secret sauce" angle—there's a certain allure in not fully understanding how a company works and imagining endless possibilities. It's not unlike how Tesla captivated markets early on by being more than just a car company, but a "tech" company. Palantir taps into that same mystique. The vagueness allows people to project whatever revolutionary idea they think Palantir's AI might achieve.
But is there a point where the lack of transparency becomes a liability? The company's insistence on keeping things vague means it's harder for potential clients or investors to quantify the value of their products, let alone understand how scalable they really are. Sure, Apollo can update software on a satellite in the middle of nowhere, but how does that translate to commercial clients beyond high-stakes industries like defense? If scaling is slower than anticipated, Palantir's mystique could unravel, and that $83.31 billion valuation might start to look more like a hot-air balloon.
In short, Palantir's valuation is a bet on potential, much more than it is on current performance. Investors are banking on the idea that AI, machine learning, and data integration will be transformative forces across industries, and Palantir is sitting right at the intersection of these trends. But in reality, they're still heavily reliant on Uncle Sam's checkbook, and their commercial expansion remains an open question. The mystique might be part of the game, but at some point, Palantir will need to prove that they can deliver scalable, real-world results beyond government contracts. Until then, that $83 billion might be built on more hope than substance.
Palantir is like the tech equivalent of Schrödinger's cat—either it's an AI powerhouse, ready to revolutionize the corporate world, or it's just a really expensive box of secrets. We won't know until someone lifts the lid.