Palantir, Tesla Have Extreme Valuations and CEO Pay. Why Karp and Musk Are Worth It and 4 Other Things to Know Today.

Is any CEO worth $24 billion? Tesla shareholders believe Elon Musk is good value at the price, and Palantir investors might think the same about Alex Karp.

Tesla’s board was happy to approve a hefty stock award for Musk and the market seemed to agree, with shares rising afterward. Palantir CEO Karp is sitting on an equity award worth $14.7 billion last month according to The Wall Street Journal—it’s set to be even more after the data company’s blowout earnings on Monday.

The lesson Palantir investors can take from Tesla is that extraordinary CEOs can ensure extraordinary valuations last for a long time. The electric-vehicle maker trades at 144 times its forward earnings, while Palantir trades at a multiple of 227 times, according to FactSet.

By any normal measure those are absurd valuations. But Tesla stock is a bet on Musk’s future ventures in robo-taxis and humanoid robots rather than EVs. Palantir backers hope its “ontology”—a fancy word for a digital representation of an organization—will become as crucial to artificial intelligence as Nvidia’s chips.

Look at Amazon.com for an example of a visionary leader who overcame market skepticism about valuation, as Jeff Bezos guided the company to e-commerce dominance. Recent tech earnings suggest AI could be comparable with the growth of the internet and Karp looks as good a candidate as any to play the role of Bezos. Palantir’s earnings could give broader reassurance to the stock market that AI spending isn’t a replay of the dot-com bubble in the making.

Still, even special chief executives don’t guarantee success forever. Musk’s Tesla now faces falling sales as competition eats into its EV lead and rivals are coming for Palantir’s market, too. The right CEO is worth huge amounts of money and can justify extreme valuations—at least for a while. The question is how to know when it’s time to move on from such stocks.

—Adam Clark

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Tech Giant Smashes Expectations as Revenue Tops $1 Billion

Data analytics software maker Palantir Technologies blew past the already high expectations Wall Street had for its second quarter earnings on continued strength in U.S. sales. Its quarterly revenue reached over $1 billion for the first time as it continued to amass new contracts with the federal government.

• Overall, quarterly revenue was up 48% from a year ago, and U.S. revenue was up 68%. There has been a lot of focus on Palantir’s federal contracts, including a decadelong $10 billion deal that consolidates 75 contracts it had with the U.S. Army. U.S. government sales were up 53% from a year ago.
• But like in the first quarter, the star of the show was second-quarter U.S. commercial revenue, up 93% on the year. Palantir gets much less traction outside the U.S. CEO Alex Karp said breakthroughs in artificial intelligence helped fuel the company’s growth.
• Third-quarter guidance was for revenue growth of 50% and adjusted operating income by 80%, well ahead of Wall Street expectations. Like in the first-quarter, Palantir raised its annual 2025 guidance, seeing revenue of $4.14 billion to $4.15 billion.
• Aside from the new service agreement, Palantir had another recent milestone with the Army. TITAN is a large truck carrying sensors, servers, and workstations for two soldiers, designed to be a mobile AI data analytics unit to be placed in the field. Palantir was lead contractor on the project.

What’s Next: Karp told investors in a letter that it was just the beginning of “something much larger” and more significant. He called the U.S. commercial business the emerging core of Palantir and the seed of what an entire industry will become.

— Adam Levine and Liz Moyer

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More Drama as Countries Brace for Trump Tariffs This Week

President Donald Trump threatened to raise the tariff rate on imports from India, currently set at 25%, as he criticized the country’s purchases of Russian oil, which he claims it sells at bit profit. He didn’t specify how much higher tariffs could be set, and India called the threat unjustified.

• Across the world, countries are bracing for Trump’s so-called “reciprocal” tariffs to kick in after he reset them again last week. Trump, who has teased he was close to a deal with India on trade in the recent past, now accuses it of contributing to Russia’s war machine.
• India’s Ministry of External Affairs responded that the U.S. and European Union are also indulging in trade with Russia, despite saying India should not. It isn’t known as of Monday evening whether a U.S.-India rift could be repaired by Thursday, when the new tariffs take effect.
• Another company scrambling ahead of that deadline is Switzerland, which faces a 39% tariff rate on its exports to the U.S. Its officials said they would extend U.S. trade negotiations past Thursday, if needed. The Federal Council, Switzerland’s highest executive body, said it has “a more attractive offer, taking U.S. concerns into account.”
• Amid the scrambling, China has approved the certification of 183 new Brazilian coffee companies for export to the Chinese market, China’s embassy in Brazil announced on social media. The five-year measure could give Brazil partial relief from steep American import tariffs.

What’s Next: The EU, which reached a deal with Trump last week, said it would pause the retaliatory tariffs it had planned to apply to U.S. goods imported there for six months. The two sides are trying to finish up a joint statement, and the suspension of EU’s retaliatory tariffs will start today.

— Anita Hamilton, Adam Clark, and Janet H. Cho

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Wall Street’s Year-End Bonus Outlook Is Improving

Wall Street bonus pools are expected to rise across most business groups, particularly for workers on stock and bond sales and trading desks. That’s according to the latest forecast of year-end bonus trends by New York compensation consulting firm Johnson Associates. It’s certainly a rosier outlook than this spring.

• Volatility brought by fluctuating Trump administration trade policies and geopolitical uncertainty in the second quarter boosted the bonus prospects for stock and bond traders. Equity sales and trading bonus pools could rise 20% to 30% from 2024, and fixed income sales and trading pools could gain 10% to 20%.
• Equity underwriting, in contrast, could see year-end bonus pools tracking flat to down 5%, the outlook found, citing a slow calendar for initial public offerings through the end of June. Bonuses for deal advisory are seen flat to up 5% from last year as the merger & acquisition pipeline builds.
• Johnson Associates, which bases its projections on proprietary information from its clients and publicly available data, said traditional asset management workers could see bonuses rise 2.5% to 7.5% over 2024. Wealth management and family office workers could see bonuses of 2.5% to 5% over 2024.
• Estimates are much more positive than they were in the company’s first-quarter report, reflecting that “the stock market has been incredibly resilient, and the upswings from April lows have had a positive impact on incentive funding,” Chris Connors, a principal at Johnson Associates, told Barron’s.

What’s Next: One trend from Johnson Associates’ first-quarter analysis that it expects will continue going forward is targeted layoffs driven by artificial intelligence, technology efficiencies, and margin pressures. On Wall Street, companies are looking at how they can “leverage AI to be more productive,” Connors said.

— Janet H. Cho

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Three Stocks to Watch This August: McDonald’s, Walmart, Nvidia

Earnings are well under way, but there are a few sectors coming that will say a lot about the current health of the consumer, including restaurants and retail. Big companies reporting earnings in August will reveal appetites for dining out, tariff impacts on retail, and the shifting dynamics around artificial intelligence.

• McDonald’s reports this week with expectations that its quarterly revenue will rise 3% from last year even after the Golden Arches missed estimates for revenue in the first quarter, when same-store sales fell 3.6%. Pricing will be a big focus for analysts.
• Already, restaurant chain Denny’s may have set the tone. On Monday, CEO Kelli Valade described a “very choppy” consumer environment that has continued through the second quarter. Demand is coming back as it dives deeper into value deals, the company said.
• Retail giant Walmart reports later this month, and analysts will be looking for any signs consumer spending is slowing and for any effects as higher tariffs kick in. Mizuho analyst David Bellinger says Walmart has immense bargaining power with suppliers that means they don’t have to raise prices.
• AI chip maker Nvidia reports at the end of August. In fresh signs of demand for Nvidia’s products, Big Tech firms last week reported growing capital expenditures on AI infrastructure such as data centers.

What’s Next: For Louis Gave, head of the research firm Gavekal, the worry is how dependent markets have become on AI spending, and by association, Nvidia. If AI spending ends up being a dud, that is a risk to markets. The recent disappointment in chip-equipment maker stocks could foreshadow trouble ahead.

— Catherine Dunn and Reshma Kapadia

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Callum Keown