What Happened?
Shares of data-mining and analytics company Palantir (NYSE: PLTR) jumped 3.6% in the afternoon session after investor optimism improved ahead of its second-quarter earnings report, coupled with a new 'Overweight' rating from analysts at Piper Sandler. The investment firm initiated its coverage on the data analytics company and assigned a $170 price target, adding to recent bullish commentary from other analysts. Investor confidence also appeared high ahead of the company's earnings release, scheduled for after the close of trading. Wall Street expected Palantir to report revenue growth of nearly 40% year-over-year, supported by a recently secured 10-year contract with the U.S. Army valued at up to $10 billion. A broader rally in software stocks also provided a tailwind, as a weak jobs report fueled expectations of a Federal Reserve interest rate cut.
After the initial pop the shares cooled down to $160.19, up 3.9% from previous close.
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What Is The Market Telling Us
Palantir’s shares are extremely volatile and have had 45 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 13 days ago when the stock dropped 3.1% as the high-flying stock appeared to take a breather following a massive run-up in its share price. The data-analytics software company has been a top performer, with the stock more than doubling so far this year on the back of accelerating revenue growth and enthusiasm for its Artificial Intelligence Platform (AIP). Despite a steady stream of positive news, including new partnerships and strong financial performance, some investors are pointing to the stock's "nose-bleed valuation" as a cause for concern. Analysts note the stock trades at a significant premium, which could make it susceptible to profit-taking even in the absence of negative catalysts. The stock is known for its volatility, and Tuesday's dip may reflect investors locking in gains after its recent powerful rally.
Palantir is up 113% since the beginning of the year, and at $160.19 per share, has set a new 52-week high. Investors who bought $1,000 worth of Palantir’s shares at the IPO in September 2020 would now be looking at an investment worth $16,862.
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