Palantir CEO Alex Karp warns some AI investments 'may not create enough value' to justify cost
Palantir (PLTR) CEO Alex Karp warned that in large swaths of the artificial intelligence market, the cost to build the technology may not be worth it.
His comments came as investors have grown increasingly concerned over whether companies’ billions of dollars in AI spending will pay off.
“So there’s really two AI markets from Palantir’s perspective: [One is] people using AI — call it enhanced intelligence to do basic things — but things that are not sophisticated enough so that they would change your revenue or margins,” Karp said in an interview at Yahoo Finance’s Invest event when asked about the hotly debated AI bubble.
“One could argue as an informed citizen that the market is very large but may not create enough value to justify the actual cost of large language models or their implementation,” Karp said.
Palantir develops AI software used by enterprises and governments for everything from supply chain management to identifying military targets.
“What we see on the ground — again, not as an opinion, but as a fact — is a subset of that larger AI market I would call AI that works either in a way that it can change the battlefield, or it can change your margins, or it can change your revenue,” he said, continuing, “[It’s] the subset of AI where you can show quantifiable results — again, life and death, safety results or results so that margins or revenue actually change dramatically and quickly enough so that you can capture the value while you’re still running the company in the structure as it exists now.”
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Tech stocks have soared to records in recent years as the rush to build AI models has fueled optimism in the sector. So-called hyperscalers that build massive data centers, including Meta (META), Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL), are set to spend $470 billion in 2025 and another $620 billion in 2026, according to Morgan Stanley estimates.
But famous short sellers Jim Chanos and Michael Burry, as well as CEOs such as Jamie Dimon, Jeff Bezos, and OpenAI’s Sam Altman, have warned that the stock market has reached bubble territory — meaning that equities are overvalued and a sell-off is looming.
Palantir stock is up 141% so far in 2025, but it recently suffered after the company’s latest earnings report left some investors concerned over its lofty valuation.
While Karp believes Palantir will dominate the AI market, generating value for enterprises and governments, he called the consumer-facing market for AI “very weak and dissipating.”
Laura Bratton is a reporter for Yahoo Finance. Follow her on Bluesky @laurabratton.bsky.social. Email her at laura.bratton@yahooinc.com.
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