Palantir CEO Alex Karp warns some AI investments 'may not create enough value' to justify cost

Palantir (PLTR) CEO Alex Karp warned that successful ample swaths of the artificial quality market, the outgo to physique the exertion whitethorn not beryllium worthy it.

His comments came arsenic investors person grown progressively acrophobic implicit whether companies' billions of dollars successful AI spending volition wage off.

"So there's truly 2 AI markets from Palantir's perspective: [One is] radical utilizing AI — telephone it enhanced quality to bash basal things — but things that are not blase capable truthful that they would alteration your gross oregon margins," Karp said successful an interrogation astatine Yahoo Finance's Invest lawsuit erstwhile asked astir the hotly debated AI bubble.

"One could reason arsenic an informed national that the marketplace is precise ample but whitethorn not make capable worth to warrant the existent outgo of ample connection models oregon their implementation," Karp said.

Palantir develops AI bundle utilized by enterprises and governments for everything from proviso concatenation absorption to identifying subject targets.

"What we spot connected the crushed — again, not arsenic an opinion, but arsenic a information — is simply a subset of that larger AI marketplace I would telephone AI that works either successful a mode that it tin alteration the battlefield, oregon it tin alteration your margins, oregon it tin alteration your revenue," helium said, continuing, "[It's] the subset of AI wherever you tin amusement quantifiable results — again, beingness and death, information results oregon results truthful that margins oregon gross really alteration dramatically and rapidly capable truthful that you tin seizure the worth portion you're inactive moving the institution successful the operation arsenic it exists now."

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Tech stocks person soared to records successful caller years arsenic the unreserved to physique AI models has fueled optimism successful the sector. So-called hyperscalers that physique monolithic information centers, including Meta (META), Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL), are acceptable to walk $470 cardinal successful 2025 and different $620 cardinal successful 2026, according to Morgan Stanley estimates.

But celebrated abbreviated sellers Jim Chanos and Michael Burry, arsenic good arsenic CEOs specified arsenic Jamie Dimon, Jeff Bezos, and OpenAI's Sam Altman, person warned that the banal marketplace has reached bubble territory — meaning that equities are overvalued and a sell-off is looming.

Palantir banal is up 141% truthful acold successful 2025, but it precocious suffered aft the company's latest net study near immoderate investors acrophobic implicit its lofty valuation.

While Karp believes Palantir volition predominate the AI market, generating worth for enterprises and governments, helium called the consumer-facing marketplace for AI "very anemic and dissipating."