# Alex Karp on 'Big Short' investor Michael Burry: 'Bats--- crazy' for bets against Palantir, Nvidia

*CNBC Television* · https://www.youtube.com/watch?v=mqa1yEd891o

## Summary

Palantir CEO Alex Karp reacts to the company's strong third quarter results and to short seller Michael Burry's large bet against Palantir and Nvidia. Karp argues Palantir is misunderstood by the expert class while retail investors have been rewarded, and calls Burry's short 'batshit crazy.' He defends Palantir's growth numbers and says the real questions for AI are whether the economics work and how much GDP growth reaches workers.

## Key points

- Palantir reported third quarter results above expectations and issued better than expected fourth quarter guidance, though shares were down pre-market.
- Karp calls Michael Burry's roughly $912 million short position against Palantir 'batshit crazy' and suggests it may even be market manipulation to exit a position.
- Karp cites a 'rule of 40' score of 114, US commercial growth of 121%, and 77% aggregate US growth off a $4.5 billion base.
- He argues short sellers have repeatedly been wrong on Palantir, which they called overvalued at 10 and at 20.
- Karp says retail investors, not the expert class, backed Palantir and got venture-like returns for the first time since World War II.
- He frames Burry's short as a bet against AI itself, since Palantir and Nvidia are the companies actually making money in the space.
- Karp says AI will only avoid being a bubble if every part of the stack creates more value than it charges.
- He raises the question of 'worker available GDP' — how much AI-driven GDP growth reaches workers, which he says Palantir enhances on the battlefield and factory floor.

## Notes

### Earnings and the Short Seller Debate
- Palantir reported third quarter results above expectations and issued better than expected fourth quarter guidance, though shares were down pre-market.
- Michael Burry has a roughly $912 million short position against Palantir and Nvidia, which Karp calls 'batshit crazy' and suggests could be market manipulation to exit a position.
- Karp notes short sellers called Palantir overvalued at 10 and at 20, and says every time they short the company, Palantir 'triples down' on delivering better numbers, partly to make them poorer.

### Why Karp Says Palantir Is Misunderstood
- Karp describes Palantir as an 'anti-playbook' company that 'explodes every assumption' of how experts build software businesses.
- He says the people who invested were retail investors using their own money, while the expert class sat on the sidelines; average Americans got venture returns for arguably the first time since World War II.
- He positions himself as a dyslexic, left-of-center figure who sticks up for progressive values, arguing the Democrats are no longer progressive.

### The Numbers Karp Cites
- A 'rule of 40' score of 114, which he compares to a Michael Phelps or Michael Jordan-level score, noting roughly 50 is Olympic grade.
- US commercial growth of 121% off almost a $1.5 billion run rate, and 77% aggregate US growth off a $4.5 billion base.
- He says Palantir has been right on major decisions for almost 20 years by making pragmatic decisions that create 'unfair advantages' for America and its allies.

### Views on the AI Space
- Karp says the two subtle issues in AI are the addressable market and the addressable market for products that actually work, growing both top and bottom line.
- He says over time every part of the AI stack will have to create more value than it charges, or it will be a bubble.
- He finds it 'super weird' that the two companies Burry is shorting — Palantir and Nvidia — are the ones making all the money in AI.

### Worker Available GDP
- Karp asks what part of GDP growth is available for workers, calling it 'worker available GDP.'
- He says Palantir enhances workers on the battlefield, in battery building, and on the factory floor, and these two questions will define the country's future.

## Transcript

[00:00] Palanteer reporting third quarter results above expectations in a big way. The company issued better than expected fourth quarter guidance. Uh shares down in the pre-market this morning. We'll talk about that as well. But joining us right now is somebody we've been talking about frankly all morning. Alex Karp is with us. Uh Palunteer CEO Alex, it is so good to see you uh this morning. Uh we had your biographer on the broadcast uh before and and and we're speaking about you now in third person, but now we're now we're doing it in first person. Uh the earnings were a blowout I think across the board. We can talk about maybe why the why the stock market's reacting the way it is. But you know I was listening to the call yesterday and

[00:38] I wanted to just for those who didn't get an opportunity to hear it. I think you made some fascinating points about why you think this company and maybe even yourself are so misunderstood. >> Um well there are lots of easy ways to misunderstand me. I misunderstand myself and you know it's not like the super conventional playbook thing. Look, we're an anti-playbook company. Uh if you want to do the personal version, I'm like this uh dyslexic formerly and I believe currently still left of center who actually sticks up for progressive values which triggers you know TDS uh loving people because I think the Democrats aren't no longer progressive. And then the company is built in a truly suagenerous unique way which would only

[01:20] be possible in America and actually explodes every assump assumption of how an expert would build a software business. The more you actually know about building software the more odd, unique and inexplicable our rise in success and I would say domination on the enterprise software battlefield looks and is. Um and then I would say one of my main issues is Palanteer because we were anti we called uh we called a lot of things that are kind of establishment views that often are uh viewed as kind of being super woke into question in every single assumption of Palanteer. The people who piled in uh to Palunteer were people investing their own money often people who are not in the investor class non-experts and even

[02:01] till today the experts sit on the sideline and say hey this can't be true while the average American who invested in Palanteer and for the first time maybe arguably in since World War II uh average Americans got venture returns investing in Palunteer. So you have this massive divide uh between the average person who evaluated themselves and the expert class that still was working on assumptions that have historically not been true that obviously if you look at the earnings if you actually look at we grew the company uh I mean I'll go through if you want to go through the numbers but extraordinary results and then the expert classes weak need and the retail people are all in. So, but in fairness,

[02:40] >> but that's what I want to ask you about in terms of the mis there because there is a misunderstanding. Clearly, you know, you look at the analysts, most analysts, you know, think that this stock is overpriced. You have people like Michael Bur out there shorting it. Everybody who's shorted this stock thus far has been on the losing end of it. And I'm trying to understand just if you look at sort of the growth trajectory, the sales, how much of the sales frankly I think actually even coming there was a huge part coming from even existing customers and just what the scale of this thing ultimately looks like in your mind. Okay, there are two parts. You know, of course, when I hear short sellers attacking uh what I believe is

[03:15] clearly the most important software company in America and therefore in the world in terms of our impact simply to make money and calling trying to call the AI revolution into question where we have these this anomalous numbers 114, rule of 40, etc. It just is super triggering because these people they could pick on any company in the world. They have to pick on the one that actually helps people that actually has made money for the average person. that that is actually supporting our war fighters. Why do they have to go after us? And I'll tell you what though, it's crazy motivating because I'll tell you why the short sellers are constantly getting screwed by Palanteer because every time they short us, we just are

[03:52] like tripling down on getting the better numbers and part honestly to make them poorer. But okay, so um the the the the question of like uh the actual power of the business and what is it worth? I mean, at the end of the day, one of the things that is actually in the book, the biography, and that I actually think that you always have to ask to to the is the person persuasive or are they right? And across all sorts of movements, political, I mean, you see this on the regressive part of the Democratic party. We're about to probably have a complete disaster. I was born in New York. Like, but if you actually said, "Do these things actually work?" Everyone's like, "Of course, I'm not going to vote for

[04:32] that." But instead, they asked, "Does it work in theory?" the theoreticians, you have to ask how often have you been right and Palanteer is about pragmatic decisions that create unfair advantages for America and its allies and on that we've been right for almost 20 years on all major decisions and I believe we'll be right going forward. Now, you could argue I don't know like they're constantly like but they they thought Panaltier was overvalued at 10. They thought it was overvalued at 20. I'm not even here saying what the valuation is. I'm just saying find a company in the world that has a rule of 114 that has US commercial growing at 121% that aggregate growth in the US is 77% that has throwing off free cash flow in a way

[05:14] that's anonymous and that is fully aligned with our customers and you figure out the value but they're in the business of being skeptical and being wrong and we're in the business of giving an unfair advantage to American workers, American war fighters and our investors. Being short is is a very difficult place to be because you can lose everything, right? You can drive these people into the ground. Michael Bur put a really big bet on. It's almost a billion dollars. It's $912 million. That's a big step for him to put into that. What when you say you redouble your efforts, what do you do? What do you go back in? >> Um, well, first of all, he's it's like he's actually putting a short on AI. So,

[05:51] the way I read it was us and Nvidia and it's like >> the biggest position is you though. I'm just through all his shorts. >> Okay. So, and and then by the way with the shorts is very complex. It's not even clear that I honestly I think what is going on here is market manipulation. We delivered the best results everyone anyone's ever seen. It's not even clear he's not doing this to get out of his position. I mean these people they claim to be ethical, but you know like they're they're actually shorting one of the great businesses of the world. And I'm not against shorting as a matter of theory, but I'm just saying pick something that is not doing a noble task. And you know, it's us against them

[06:22] and that's a good position for us. I I mean look when you're printing a rule of 114 again people who aren't technical I think roughly a an incredible score like an Olympic grade score on rule of 14 is like 50 I mean that's roughly like if you're between 50 and seven you're an Olympic athlete of unique influent athlete this is like Michael Phelps like score like Michael Jordan like there are no scores like this there and and 121 growth off of almost a 1.5 run rate in US commercial and a 77 77% growth in the US and an aggregate off of an aggregate base of of $4.5 billion. By the way, I predicted we'd get here. So, you know, it's like I if you want to short that, be my guest. You go ahead. We're just

[07:07] going to go do our things. I mean, look, I'll tell you, there's a tale of two cities in our society. We need experts versus retail. And you see it like, you know, I don't know why these newspapers are running, helping Mandani win. I don't know why we can't have honest discussions about our future. I don't know why we have to allow fentanyl attack, but it's almost always sympathy for the expert that doesn't need it. The short seller that has some ridiculous reason for doing something against I mean most of GDP growth in this country is because of AI. The real question is how do we grow that and expose workers? What is the worker available GDP? That's the question for our society. Instead of aligning on that, we've got these

[07:46] completely and again if the numbers weren't there, great. be my guest. But then the numbers are there. So then you you're not it's not even clear he's actually shorting us. It's it's probably just how do I get my position out and not look like a fool. I don't know. But I do think this behavior is egregious and I'm going to be dancing around when it when it when it proves it's proven wrong. Right. Alex, we've heard a lot of talk from the likes of a Michael Bur, but more broadly about whether we're in an AI bubble, whether the economics make sense. Clearly in the context of Palunteer uh they do make sense in so far as you you're you're printing money over there. Um not everybody in the AI space is printing money in the same way

[08:26] and they're spending an enormous amount um on chips, data centers and the like. How do you see the broader space right now in terms of just how things are are are developing? The there there are two subtle issues in AI. what is the addressable market and what is the addressable market for things that work meaning you make more money and your the quality of the money is higher so top line and bottom line grower we're in the business of the a part of the addressable market where it works and it can be quantifiable either commercially or on the battlefield so you that clearly and and over time you're going to have trader optimality meaning that every part of the stack is going to have to create more value than they charge

[09:05] that's just obvious and if that doesn't happen it will be a bubble and you I mean, I'm sorry. Short sellers can't tell a difference between products that work and products that don't, but these numbers should show you that there's a part of the market that to you quote you is printing cash. And it looks like that part of the market is the park we own. There's a separate question, by the way, which I think is equally relevant. What part of the GDP growth is available for workers? What we call worker available GDP? And that's like one of the unique things about Palunteer is whether it's on the battlefield like the people writing the scripts for these very complicated operations or building batteries or doing things on the factory

[09:40] floor are being enhanced by our product. And those two it's really those two questions are going to define arguably the future of what happens in this country. Does GDP grow because of AI which only can happen if if there's prao optimality or and and what the way we see it the c the customer pays less than the value they create which is abnormal uh not exactly equal prao optimality and that it's unknown honestly you have this massive growth but you know currently as far as I can tell the two companies he's shorting are the ones making all the money which is super weird like the idea that chips and what you want to short is batshit Crazy.