Gladiator 3 – Palantir v Coreweave

The problem with a super-strong chart is that it always looks too late to buy. My take on what is happening is that investors are trying to find the right price for what many have realised is an incredibly exciting business.

Palantir supplies technology to take warfare to the next level. Its software is so important that the company decided years ago to sell only to the United States and its allies. Initially, it had to sue the US government to make them take its software seriously, but having won that battle, demand is exploding from all branches of intelligence and the armed forces.

Globally, two things are happening. The world is polarising between two increasingly hostile camps. The expectation is growing that countries need to prepare themselves for an increasingly dangerous world. The peace dividend is fading into history as nations gird up both industrially and militarily to protect themselves and their interests.

Military spending is going through the roof. It is no longer enough to have a nuclear deterrent and a few soldiers. Countries need a flexible response, including tactical nuclear weapons. They also need industrial capacity to fight the wars of the future, superb intelligence and defensive capabilities, aka the Golden Dome, way beyond anything currently envisaged.

Instead of the liberal dream of an end to history as democracy triumphed everywhere, we seem to be heading closer to the dystopian world of 1984.

In the fictional world of George Orwell’s 1984, the three superstates, Oceania, Eurasia, and Eastasia, are permanently at war with each other. Oceania, specifically, is shown to be in a constant state of conflict, though the specific enemy can shift between Eurasia and Eastasia. The nature of the war and its purpose are complex and serve to maintain social control and power within Oceania. 

AI Overview

There has been serious speculation in the press that Russia might call the West’s bluff by attacking a NATO country. If this were to happen, what a perfect time for China to invade Taiwan. I have no idea what is going to happen, but there is a feeling of the world pre-1914 when military expenditures and global tensions were rising dramatically.

The problem with the nuclear deterrent, shades of Dr Strangelove, is that it cannot be trusted. Suppose China seized control of Taiwan. What would the West do, nuke China to save Taiwan? That is never going to happen.

Similarly, if an increasingly militarised Russia invaded Poland, how would NATO respond, nuke Russia and be nuked in return?

We need a far more flexible and sophisticated military response and such formidable capabilities, both military and industrial, that the bad guys are frightened to tweak our tails. Not least, we need a touch of the strategy that worked so well for Reagan. We need to outspend the bad guys and deploy terrifyingly advanced technology that they cannot match.

The Golden Dome is a powerful deterrent because the only way to find out if it worked would be to launch an all-out attack on America. The deterrent comes from the POSSIBILITY that it might work. It becomes crucial for the bad actors to never find out; that uncertainty then works in favour of the West.

But with that deterrent in place, which will involve stupendous spending, we also need flexible responses so that Russia, China, Iran, et al are reluctant to engage us at any level.

Palantir would be an exciting company if it were only engaged in addressing the West’s need to reinvent its military capability, but incredibly, its civilian business is growing even faster. Fourteen customers in 2019 were 592 recently and will be well over 600 now.

Alex Karp described what is happening in his latest letter to shareholders.

The rush towards large language models, as well as the foundational software architecture that is capable of making them valuable to large organizations, has turned into a stampede.

What was once a relatively orderly process of assessment and evaluation of these novel technologies has evolved into a ravenous whirlwind of adoption as an increasing number of institutions grasp the magnitude of the shift that is washing over industry and government.

And nowhere has the change been more evident than in the United States.

Our total U.S. revenue grew 55% year-over-year to $628 million in the first three months of the year, while commercial revenue from our U.S. customers soared 71% in the same period to $255 million.

Alex Karp, Letter to Shareholders, Q1 2025, 5 May 2025

Coreweave doesn’t have such an exciting story as Palantir, but it is growing much faster. It is going from being an idea to a multibillion-dollar operation almost overnight.

Our Q1 revenue was $982 million, up 420% year-over-year. Our revenue backlog, which includes remaining performance obligation, RPO, plus other amounts we estimate will be recognized as revenue in future periods under committed customer contracts was $25.9 billion up 63% year-over-year.

In March, we signed an OpenAI strategic deal, the contract value for which is up to $11.9 billion. Partnering with OpenAI on this net new contract underscores CoreWeave’s proven ability to deliver reliable and performant infrastructure services, powering AI innovations for the world’s leading AI labs. We also added new enterprise customers and a new hyperscaler and signed a recent $4 billion expansion with a large AI enterprise. This $4 billion expansion was signed in Q2 and will be reflected in our revenue backlog numbers beginning in Q2. It is not included in our Q1 reported numbers. To be clear, this is additive to the Q1 ending revenue backlog of $25.9 billion.

While our revenue backlog is expected to scale rapidly over time, growth rates will fluctuate from period-to-period given the nature of our committed contract business model, timing and size of new contract signings, and revenue recognition.

Nitin Agrawal, CFO, Coreweave, Q1 2025, 14 May 2025

Coreweave is a company where you either believe or you don’t. The bear argument is that the company is fundamentally unprofitable and will be exposed as soon as the AI infrastructure boom begins to wind down.

There are two things to say about that. First, people close to the action, such as Jensen Huang of Nvidia, Larry Ellison of Oracle and many others, think the build-out boom is just getting going.

Secondly, the senior management at Coreweave insists that their business model is highly profitable. A profit is built into the contracts they write, and they will then be left with fully depreciated equipment still generating income.

Turnover of $10bn – $11bn, which they could achieve in 2025, might seem a lot, but not if the world is heading for spending on AI factories running into the trillions of dollars. No wonder these guys say they are just getting started.

Unless they are lying through their teeth and why should they prospects look incredible.

CoreWeave’s platform enables the world leading artificial intelligence companies to train AI models and run inference at scale. We are just getting started and demand for our platform is robust and accelerating. In particular, we are excited to see the broad-based increase in demand for inference as well as the accelerating adoption of AI by our enterprise customers. AI growth and adoption remains severely limited by capacity constraints. CoreWeave is scaling as fast as it can to meet the demands of our customers.

Michael Intrator, CEO, Palantir, Q1 2025, 14 May 2025

Coreweave is ideally positioned at the heart of an investment boom unlike anything the planet has ever experienced.

AI is the greatest technological revolution of our lifetime, and we believe that the company can create tremendous shareholder value by growing its leadership position.

Michael Intrator, CEO, Coreweave, Q1 2025, 14 May 2025

Share Recommendations

Palantir. PLTR

Coreweave. CRWV

Strategy – Be Bold And Buy

Palantir and Coreweave divide opinions in the investment community like nothing I have seen since the early days of Tesla. I am not equipped to understand the technology of either company, but OmiGod, the vibe, is incredible. Both companies are on fire with excitement. They believe in a glittering future. I want excitement in my investing above anything, so that works for me!

Bet on a horse or a number on a roulette wheel, and it is all over in seconds. These guys could keep the adrenaline pumping for years.