Citi Analyst Issues Alert on Red-Hot Peter Thiel-Backed Software Company, Warns the Firm’s Competitive Edge May Be Unsustainable

A senior equity analyst at banking giant Citi is warning about one red-hot software company co-founded by billionaire Peter Thiel.

In a new interview on CNBC Squawk Box, Citigroup analyst Tyler Radke says that the analytics software firm Palantir Technologies (PLTR) may lose its current competitive edge as artificial intelligence (AI) advances.

“The reason I think they’re winning today is every organization around the planet is trying to get started with AI, and before you can deploy a model or an AI application, you have to get your data in order.

Palantir’s data ontology product, which is their flagship product, it helps big businesses, governments around the world. They’ve gotten in the door very effectively with that, even internally, large banks, you’re starting to see good usage of that.

I think over time, the rest of the industry is sort of following their playbook. What you have to underwrite from these levels, and given how fast the market is changing, the risk-reward is just not something we’re particularly excited about here.”

As of Thursday’s market close, Palantir Technologies is trading at $156, up more than 106% year-to-date, and has a market cap of approximately $370.5 billion.

Radke says that the demand for Palantir’s services may decline over time as AI innovation continues.

“There doesn’t appear to be an obvious [competitor] today, but what about down the road, especially as you start thinking about what AI can do in terms of organizing your data and doing that data ontology? Again, Palantir is leaning into AI.

We think they’re doing an excellent job, but over time, you combine the resources that everybody else has out there, plus the power of this technology, it’s unclear to me if that edge is sustainable, especially as we get into more AI use cases moving into production, adopting LLMs (Large Language Models).

I think this data organization phase that we’re in, that’s going to evolve, that’s kind of the early stage of this AI market.”

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