Can we trust America or its tech?

The market says Tesla and Palantir will continue to thrive under Trump - but we should be wary of them

I wrote in April that despite falling back this year, Tesla’s shares were still insanely overvalued. A price/earnings (P/E) ratio of 131 told us that, despite falling sales, investors still believed that Elon Musk’s electric car company was on course to become one of the world’s most profitable businesses. Well, since then things have got even more bonkers. Apparently investors saw Musk’s departure from DOGE - abandoned as a smoking ruin at the roadside - and promise to devote himself to the business as great news. The shares climbed ever higher with the P/E ratio topping 200 at one point.

Just to put that into context, in 2007, the year it launched the iPhone, Apple’s P/E ratio hovered between 31 and 34 and in the years since, as it became evident that the company owned history’s most profitable product, it has only briefly topped 40.

And looking through the tech stock index the NASDAQ it is hard to find any company with anything even approaching Tesla’s sky high approval rating from investors. Nvidia, the company whose chips power the AI revolution, has a P/E of 44, for Microsoft, well placed to profit from AI, the figure is 36 while Uber gets a lowly 15.

But I did find one company which managed to make Tesla’s rating look quite modest. Palantir, the AI software company, has a P/E ratio of 600 after seeing its shares soar 75% so far this year. Any business that can credibly (or even incredibly) claim that it is focused on artificial intelligence is getting vertiginous valuations right now, much as slapping dot com on the end of a company name sent businesses with negligible revenues into the FTSE100 in 1999. Palantir’s valuation does seem crazy but then, unlike Tesla, it has had a very good few months, winning lots of profitable new business from the Trump administration.

But why should anyone who is not heavily invested in the stock market care about the irrational exuberance of buyers of Palantir and Tesla? One big reason - the higher the share price, the more power it puts in the hands of their owners to shape the most powerful and dangerous technology of our times. This came home to me when I read a review of a book with an extraordinary title More Everything Forever: AI Overlords, Space Empires, and Silicon Valley's Crusade to Control the Fate of Humanity by tech journalist Adam Becker. (By the way, I came across it thanks to John Naughton’s invaluable Memex newsletter.)

The review by John Kaag in The Atlantic describes how the book outlines a new vision akin to a religion which has gripped many Silicon Valley oligarchs. They have suddenly become convinced that AGI - Artificial General Intelligence - is imminent, and that it will solve all short-term problems such as climate change, leaving them to focus on long-term objectives such as finding a new home for humanity on Mars or defeating death.

This in turn means that petty short-term concerns such as inequality or the excessive power of tech bosses can safely be ignored. It also seems to mean that people whose careers have been built pushing back the frontiers of science feel comfortable working for a Trump administration contemptuous of mainstream scientific opinion on everything from climate change to vaccine safety. In doing so, they have embraced the same attitude to facts and the truth as a President who over the weekend shared a conspiracy theory that his predecessor had been executed in 2020 and replaced by clones or robots.

Look no further than Elon Musk’s work at DOGE for an example of this philosophy in action. Fantastical claims about the tax dollars saved which crumbled under examination, reckless sacking of thousands of government workers without any consideration that nuclear weapons safety inspectors might serve a useful purpose, untold damage done to vulnerable people dependent on USAID for HIV treatment. “The world’s richest man has been involved in the deaths of the world’s poorest children,” as Bill Gates put it.

Meanwhile, Palantir has cheered Musk’s efforts at DOGE all the way and it seems is now a key participant in one of its more sinister initiatives. The New York Times reports that Trump has hired the data mining company to build a database of all Americans’ private information scraped from their interactions with various government departments using its Foundry product.

Palantir’s founder Peter Thiel, a Silicon Valley early adopter of Trump having been one of the few tech bosses to cheer him on during his first term, is on record as saying freedom and democracy are incompatible. Now his company is building the President a weapon that could be used to target his political opponents, further eroding democracy in the United States.

Now, other tech giants have bent the knee to Trump. Apple paid $1 million to his inauguration fund, while Amazon is paying Melania Trump $40 million for a documentary about her life, which I suppose is a cheap way to ingratiate itself with the First Family.

But given the tsunami of corporate cash that washes over every American election, such sums are nothing out of the ordinary, just the price of doing business. What is different about Tesla and Palantir is their full-throated commitment to the Trump project.

Remember, this is a President who has gone about dismantling much of American financial regulation in just a few months, replacing the head of the SEC, sacking 17 Inspectors General who provided independent oversight of government agencies, and hobbling consumer protection watchdogs. He and Melania have each launched their own memecoins, providing opportunities for foreign billionaires or governments to pay large sums to Trump Inc without leaving any trace. 250 major investors in the Trump cryptocurrency who did not mind going public were invited to a gala dinner at his golf club. After the Biden years where there was no enthusiasm for deregulation, the cryptocurrency industry is expecting the shackles to be removed.

The British government provides advice on doing business in various countries, warning about issues such as bribery and corruption. At the moment, the advice for the USA warns of the danger of falling foul of strict American anti-corruption laws - that may have to be tweaked.

When a man like Elon Musk, beneficiary of huge defence contracts for both Tesla and SpaceX, is put in charge of a government efficiency programme, then we are in a different world - one where developing countries facing stiff tariffs can be pressed to allow Musk’s satellite internet service to operate.

As for the UK’s dealings with Palantir, surely that New York Times story about the database of American citizens must set alarm bells ringing at the Department of Health. The major contract which sees Palantir run the NHS Federated Data Platform which is supposed to make patient data flow seamlessly between hospitals was already controversial. The company and the government have both promised that our data is perfectly safe in Palantir’s hands. But the product being used to mine that data is Foundry, the same software scraping American government databases to build Trump’s Big Brother system. Does that give you a warm glow? I thought not..