These Types of AI Investments May Not ‘Justify the Actual Cost,’ Warns Palantir CEO

Alex Karp, the CEO of Palantir (PLTR), believes that much of today’s AI market may not be worth the huge amounts of money being spent. At Yahoo Finance’s Invest event, he explained that there are really two kinds of AI. One is used for simple tasks that don’t actually boost a company’s profits or revenue in a meaningful way. The other, smaller part of the market is where AI can truly make a difference, either by improving business performance or by making a difference in life-or-death situations.

Karp said that Palantir focuses on that second group that produces real results, like helping governments with military decisions or helping companies run their operations better. He added that this version of AI actually leads to noticeable changes in revenue, profits, or safety, and made it clear that Palantir is not just sharing opinions, but seeing these outcomes in real-world use. It’s this high-impact part of AI that Karp says is worth the investment, not the basic, flashy tools that don’t create measurable value.

While tech companies have been racing to build AI tools, some experts warn that the hype may be too much. Firms like Meta (META), Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL) are expected to spend over $1 trillion on AI infrastructure by 2026. However, critics like Jim Chanos, Michael Burry, and OpenAI’s (PC:OPAIQ) Sam Altman say the stock market may be in a bubble. Nevertheless, Karp still believes that Palantir will lead the enterprise AI space, but stated that the consumer AI market is “very weak and fading.”

Is PLTR Stock a Good Buy?

Overall, analysts have a Hold consensus rating on PLTR stock based on three Buys, 11 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average PLTR price target of $187.87 per share implies 7.9% upside potential.

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