What Happened?
Shares of data-mining and analytics company Palantir (NYSE:PLTR) jumped 5.6% in the morning session after Wedbush analysts reaffirmed their Buy rating, suggesting they are unshaken in their resolve, despite the company surrendering most of its post-earnings (Q4 2024) stock gains amid worries about government budget cuts. The analysts highlighted Palantir's ability to win a bigger share of the remaining pie, citing its AI capabilities and involvement in key military projects.
After the initial pop the shares cooled down to $88.01, up 3.7% from previous close.
Is now the time to buy Palantir? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Palantir’s shares are extremely volatile and have had 32 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 7 days ago when the stock dropped 11.6% on the news that markets continued to struggle following the broad selloff triggered by weak economic data in the previous week. On Friday, February 21, 2025, the S&P 500 dropped 1.7%, and the Nasdaq fell 2.2% after PMI numbers showed the U.S. services sector contracted, and the University of Michigan's consumer sentiment index came in below expectations.
Adding to Wall Street's anxiety, rumors swirled that Microsoft is trimming its forecasts on data center projects, raising concerns that AI-related investments may get a little too bloated.
TD Cowen analyst Michael Elias flagged three key findings from his research. He noted that Microsoft "1) cancelled leases in the U.S. totaling 'a couple of hundred MWs' with at least two private data center operators, 2) has pulled back on the conversion of SOQ's to leases, and 3) has re-allocated a considerable portion of its international spend to the U.S."
Jefferies analysts see this as more of a regional spending adjustment, noting that Microsoft executives "strongly refute" any major shift in their data center strategy.
Palantir also has the not much-coveted title of being the most "expensive stock in the S&P 500," raising concerns about a potential pullback.
Adding to investor unease, CEO Alex Karp recently introduced a new stock plan that could significantly increase the share count, potentially diluting existing shareholders. With so many moving pieces, investors are bracing for a volatile week ahead, while hoping for clarity.
Palantir is up 17% since the beginning of the year, but at $88.01 per share, it is still trading 29.4% below its 52-week high of $124.62 from February 2025. Investors who bought $1,000 worth of Palantir’s shares at the IPO in September 2020 would now be looking at an investment worth $9,257.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.