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You can say anything you want about Palantir (NASDAQ:PLTR | PLTR Price Prediction), but one thing no one disagrees with is the fact that it is well-run. Management has kept the ship tight and agile, and its workforce is not bloated.
CEO Alex Karp has relished this to a great extent, and he even mentioned trimming the company’s headcount while expanding revenue growth. That’s unimaginable for most tech companies, but AI is letting them do this. Karp said during Palantir’s Q1 2026 earnings call that “…there is a wide view out there in the world that AI slop is going to take over the world, our clients, especially lasting primordial infrastructure industries, know this is not the case.”
He added, “They buy our product despite the fact we have 70 salespeople. A normal company of our size would have 7,000. Only seven of our salespeople actually even really sell. We are doing what a normal company would do with 7,000 salespeople with seven people.”
Other companies are copying this model
Get to know any tech worker, and they’ll tell you that the era of ping pong tables at the workplace, coupled with a few hours of real work a week, is over. Tech companies are catching up after AI and are making significant use of it. AI has significantly changed how tech companies look at their workers. They are no longer seen as an asset and are increasingly being looked at as a liability.
Meta (NASDAQ:META), Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG), or any major software tech company you can think of is trimming its workforce regardless of where profits are going. And like Palantir, their revenue growth is not being hampered by the reduction in their workforce.
In fact, certain AI companies are also trying to copy Palantir’s Forward Deployed Engineer (FDE) playbook. Anthropic recently announced a $1.5 billion enterprise deployment joint venture backed by Blackstone, Hellman & Friedman, and Goldman Sachs. OpenAI raised $4 billion at a $10 billion valuation for a parallel “development company.” Both are explicitly built around embedding engineers in client companies.
Palantir wants to trim other workplaces, too
Palantir’s Artificial Intelligence Platform, or AIP, is something that the company’s management claims can replace existing software. Palantir replaced its own CRM with something built on AIP in a few months. Many legacy software companies could face existential pressure from Palantir. And even when it comes to software that cannot be replaced, Palantir is offering to significantly speed up and simplify processes to the point where companies no longer need as many workers.
White-collar companies are thus likely to keep reducing their headcount in the coming years. And even if they are going to face pressure to cut costs regardless, due to AI making it easier to develop software.
Moreover, private institutions aren’t the only places that are seeing their workforces being reduced. At the U.S. Navy, Palantir’s Ship OS platform reduced manufacturing bill of materials approval time from 200 hours to 15 seconds. If you are running a Navy supplier and AIP can do in 15 seconds what used to take 200 hours, you do not need the team that was doing it. You might need a smaller team that supervises the agents, audits the output, and handles the unusual cases. However, your headcount will collapse.
Time to buy PLTR stock?
All of this AI displacement does mean more profits for businesses, and it also means solid growth and profits for the companies making it possible. But even then, I do not think you should buy PLTR stock as heavily.
The stock is trading at 92 times forward earnings and 127 times trailing free cash flow. Revenue growth is expected to double to ~52% annually, but even that does not justify these prices. You’ve likely heard analysts complain about Palantir’s valuation dozens of times in the past, but Wall Street has finally done something about it.
PLTR stock is down 36% from its high and has now been treading water. Wall Street wants to see earnings and sales catch up until Palantir is at fair value. After that, the stock will likely follow cash flow growth.
I would avoid buying more PLTR stock right now and would instead load up on AI hardware stocks. Palantir may not be paying for more employees, but it is certainly paying for more hardware, and these costs are only going to rise with time.
