Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Palantir, the US software company famous for its work with intelligence agencies and the military, has traced a highly volatile path in its brief life as a public company.Since coming to Wall Street four years ago, chief executive Alex Karp has often complained that the stock market doesn’t understand his company. Investors were put off by a long history of red ink and seemed unimpressed with the pace at which it was trying to move beyond its roots in government business to become a mainstay of corporate IT. By early last year, the shares had slumped back below their price at the time of listing.Karp has little patience with stock market critics. From the Wall Street analysts that follow Palantir, the company has only taken questions in the last five earnings calls from the same two super bulls who have relentlessly backed the stock.Partly thanks to its strong following among individual investors, things have changed. Artificial intelligence mania has lifted the stock nearly six-fold since the start of last year, pushing its valuation into the stratosphere. It is now trading at around 30 times its expected revenue this year, and 100 times earnings.This week, Palantir’s rise from unconventional outsider to member of the tech establishment was confirmed as it joined the S&P 500 index. Admission follows the first 12-month period of sustained profitability in its 20-year history — a requirement for being included.The company’s arrival was part of a change that will give the widely followed index an extra shot of artificial intelligence, at a time when Wall Street is trying to assess the staying power of the AI rally that has dominated the market over the past 12 months.Michael Dell, a tech founder from another era, also returned to the S&P 500 this week, 11 years after taking his PC company private. His renamed Dell Technologies has become a mainstay of the data centre hardware business and its stock is up three-fold since the start of last year after catching the AI winds. But it is Palantir that represents the more interesting attempt to bring AI to the corporate world.The company’s leaders have long seemed dedicated to the proposition that enterprise software should be anything but boring. Peter Thiel, who became widely known outside tech circles in 2016 for his outspoken support of Donald Trump, co-founded the company with the goal of helping intelligence agencies do a better job of marshalling data about terrorists to prevent a recurrence of 9/11.Thiel’s history, his company’s close ties to intelligence and the military and concerns about the power of its data collection and analysis software have made it a bête noire with civil liberties’ groups. Behind the drama, Palantir has been pushing some of the hardest things in enterprise tech. The goal of its software — to help big organisations get the right data into the hands of decision makers at the right time to support judgments made on the fly — has involved some heavy engineering, building a platform to combine different data sources and the tools to make the data useful. Yet applying standardised technology across organisations fails to take account of their differences, leading to the need for heavy (and expensive) customisation — the eternal yin and yang of enterprise software. The move into profitability suggests Palantir has finally made headway in honing its business model, though it still needs to show it can make it work with a larger group of customers as it moves into the wider business world.The other hard challenge is to take large language models — probabilistic systems that by their nature sometimes produce wrong answers — into the heart of decision-making in government and businesses. Wariness about how much to trust this software has left most big organisations picking around the edges, using it to try to trim operational costs rather than take on the kind of critical tasks that Palantir was set up to tackle.Recent news suggesting Palantir’s message is resonating with a wider group of companies trying to make sense of generative AI has encouraged the bulls. Revenue growth has accelerated and the company’s customer count rose to 593 in the latest quarter, 41 per cent more than the year before. The company has been warning of the heavy costs ahead as it lays the ground for this AI revolution, though it also says it expects to remain profitable. If the shares hold on to their recent gains, Karp may end up deciding he loves Wall Street after all.richard.waters@ft.com
