The Bear Argument Against Palantir Is Collapsing. Here’s Why.

One of the most polarizing and perhaps misunderstood, businesses on Wall Street is Palantir Technologies (NYSE: PLTR). For years, the company was privately held and bankrolled by prominent Silicon Valley venture capitalists — most notably, Peter Thiel.

Unlike other start-ups, Palantir remained somewhat elusive during its time as a private company. Very little was known about its operation beyond its ties to the U.S. government.

When Palantir hit the public exchanges in late 2020, a dichotomy was formed almost immediately between retail investors and institutional funds. The retail community took a liking to it, thanks in large part to its CEO, Alex Karp.

But Wall Street had a different opinion. Many research analysts saw the company as no more than a government contractor or a glorified consulting business, masquerading as an enterprise software developer.

After a brutal sell-off in 2022, the stock rebounded sharply last year, surging by 167%. Since reporting earnings for the fourth quarter and full year 2023 earlier this week, Palantir has been on another tear.

Let’s dig into the earnings report and assess how the company is debunking Wall Street’s bear argument.

Isn’t Palantir just a government contractor?

Palantir works closely with the U.S. government and its Western allies. Given the company’s reliance on large public-sector deals, many on Wall Street dubbed the business a contractor similar to RTX Corporation or Lockheed Martin.

There is a lot of money to be made in government contracting, but these deals tend to be lumpy and are far less predictable than other traditional technology businesses. Management spoke at length about the company’s sophisticated data analytics capabilities rooted in artificial intelligence (AI); Wall Street just didn’t seem to buy it.

In fact, Edwin Dorsey of The Bear Cave went as far as to declare Palantir an “AI imposter.”

The struggle is real, or is it?

Given the sentiment above, it’s clear that Wall Street had…