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Palantir's Alex Karp Warns Much AI Spending Won't Justify Its Cost, Outlines Two‑Market Thesis

He highlights mission‑critical deployments in defense and enterprises as the segment that reliably creates measurable value.

Overview

  • At Yahoo Finance's Invest event, Karp said large parts of the AI market may not create enough value to cover the cost of large language models and their implementation.
  • He described two AI markets: broad basic enhancements versus a smaller subset that delivers quantifiable shifts in battlefield outcomes, margins, or revenue, and he called consumer-facing AI very weak and dissipating.
  • Palantir develops AI software for governments and enterprises, including its Gotham platform used by the U.S. and allies to plan and oversee military operations.
  • Palantir shares are up 141% so far in 2025 but recently pulled back after earnings as investors questioned valuation.
  • In a separate CNBC interview, Karp criticized short-sellers including Michael Burry, drawing an opinion piece that labeled his remarks emotional and light on facts.