Palantir CEO Alex Karp says a tidal wave of macroeconomic risks will wipe out some companies

Palantir CEO Alex Karp arrives ahead of a “Tech For Good” meeting held at the Hotel Marigny in Paris on May 15, 2019, to discuss good behavior for tech giants.

Bertrand Guay | AFP | Getty Images

Palantir co-founder and CEO Alex Karp believes this period of “deadly” macroeconomic uncertainties will crush many companies with shaky fundamentals.

“Bad times are incredibly good for Palantir…bad times really reveal the sustainable businesses, and technology is going through bad times…interest rates are the reason,” Karp said on CNBC’s “Squawk Box” on Thursday. “Will this deadly tidal wave wipe out some businesses? Yes, it will.”

The Federal Reserve raised benchmark interest rates by another three-quarters of a percentage point on Wednesday to a range of 3%-3.25%, the highest level since early 2008. The Bank of England, the Swiss National Bank and the central banks of Norway, the Philippines, South Africa, Taiwan, Vietnam and Indonesia followed suit and raised rates to contain inflation that has risen over the past year.

Palantir is a data analytics software developer that was made public through a direct listing in September 2020 after nearly two decades as a private company. The stock has fallen nearly 60% this year.

Karp said only those quality companies that produce durable goods would survive the hard times.

“You’re going to see that the sustainable businesses that come out of this in three, four years … will be largely from America, largely from the West Coast, and they’ll focus on producing things that really matter,” Karp said. .

The risk of a recession in the US crept up as the Fed pledged to beat inflation with aggressive rate hikes. The central bank has revised its economic projections downwards, predicting higher unemployment and much slower GDP growth.

Karp believes that the situation abroad is even more dire.

“People are less afraid of energy outside of America,” Karp said. “They are so afraid of the macro-political conditions that nobody wants to talk about it. Their enterprises are built for a static and unified world of peace. The balance sheets are clearly often unprepared for what is going to happen, what I think will be politically and economically. it’s going to get pretty bad in the next few years.”

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