Andrew Left Shifts Focus to AI, Bullish on Databricks After Palantir Call

Andrew Left, founder of Citron Research and a prominent figure in short-selling, has shifted his focus from bearish calls to bullish prospects in the artificial intelligence sector. After labeling Palantir Technologies as “overvalued” in mid-August, Left is now highlighting the potential of Databricks, a private AI company he believes could rival Palantir.

In a notable appearance on Fox Business on August 14, Left expressed his concerns regarding Palantir’s valuation, which had seen a staggering increase of 144% earlier in the year. He remarked, “I’ve stopped even looking at the ratio because it’s become so absurd,” referring to the company’s price-to-earnings multiple. Following his critique, Palantir’s stock has experienced a decline of approximately 17%.

Left’s reputation as a short-seller was solidified during the 2015 controversy surrounding Valeant Pharmaceuticals, which he famously referred to as the “pharmaceutical Enron.” His reports have historically prompted sharp movements in stock prices. However, public sentiment turned against him during the GameStop saga in 2021, which saw his short position suffer amid the stock’s unprecedented surge. This experience led Left to reassess his approach to the market.

Now, with ongoing legal challenges, including a charge from the SEC for market manipulation and securities fraud, Left is focusing on companies he believes have strong fundamentals and upside potential. His next target is Databricks, which he identifies as a competitor poised for significant growth.

Left’s Optimism for Databricks

Left’s enthusiasm for Databricks stems from its impressive growth trajectory and business model. He noted that while Palantir is heavily reliant on government contracts, Databricks operates as a true Software as a Service (SaaS) model and is experiencing faster growth. He stated, “If you ask someone, aside from the hyper scalers, who the biggest competition for Palantir is going to be, it’s going to be Databricks.”

His confidence in Databricks was further emphasized in a post on X (formerly Twitter) where he congratulated the company on achieving a valuation of $100 billion. He contrasted this with Palantir’s stock price, suggesting that if Palantir were valued similarly, its shares would plummet to around $40, a reduction of nearly 75% from their current levels.

Left’s analysis indicates that many investors may view Databricks as the stronger business at present. He emphasized its growth potential and noted that “most would agree Databricks is the stronger business today.”

Although Left is bullish on Databricks, potential investors may need to exercise patience. The company has indicated that it has no immediate plans to go public, with current projections suggesting a mere 10% chance of an IPO announcement within the year, a drop from 30% earlier in August.

As Left navigates his shift from short-selling to identifying promising long positions, his endorsement of Databricks highlights the evolving landscape of AI companies and their impact on the market. Whether he successfully reinvents his reputation in this new phase remains to be seen, but his insights continue to attract attention in an industry marked by rapid change and innovation.