dvances in artificial intelligence Palantir or AI software Tchnl-A received praise from analysts and its value rose 25% in the stock market on Tuesday, according to Josh Schafer of Yahoo Finance.
“I’ve never seen the level of enthusiasm and customer demand that we’re seeing right now for (AI platforms) in the US commercial sector,” Palantir Chief Financial Officer Ryan Taylor told investors during the call. .
The software company’s Artificial Intelligence Platform (AIP) was mentioned nearly 50 times during the call. And according to Palantir, this is a key reason why it expects US commercial revenue to grow nearly 40% by 2024.
It’s also why the stock has risen more than 100% in the past year as AI euphoria has sent many tech stocks roaring. Amid rumors that Denver-based Palantir’s stock is overvalued, Tuesday’s market action is the latest sign that investors aren’t tired of AI trading, even if Wall Street believes the part of the trade exceeds any fundamental support.
“We are incredibly bullish on Palanitr,” Moringstar equity analyst Malik Ahmed Khan told Yahoo Finance Live. “If you look at our forecasts, we are above consensus on profit, revenue, etc. At the same time, we cannot justify Palantir’s current valuation in the base case.”
Jefferies equity analyst Brent Thill, who entered the earnings report with a sell rating on Palantir, acknowledged in a research note after the release that AIP growth exceeded expectations. But even after upgrading the stock to Hold, Thill still warned about the cost of the stock.
“The biggest concern is valuation, as the stock trades at a 23% premium to the large cap average,” Thill wrote.
Palantir isn’t the only one drawing a new bid for AI hopes starting in 2024. On Monday, Goldman Sachs Group raised its price target on NVIDIA shares to $800 from $625, citing ” strong demand for AI”, and other things. The stock jumped nearly 5% to a new all-time high.
Additionally, IBM shares have risen about 15% in the past month after demand for AI boosted profits. AI leader Microsoft saw a muted reaction to revenues, although the company attributed 6 percentage points of Azure revenue growth to AI services. But to be fair, the stock is also trading at an all-time low and is up more than 10% in the past month. The same can be said for AMD, which did not grow thanks to its AI-driven gains, but more than 25% in the last month and close to an all-time high.
These moves raise a question for investors: When will AI euphoria reach a price that investors are no longer willing to pay? For Morningstar’s Khan, that may depend on how the US economy performs for the rest of the year.
“There is a chance that if the economy remains strong, clients will continue to invest in some of the new growth areas,” Khan added. “At the same time, if we’re looking at a recession or something else that’s happening in the broader economy and the economy isn’t as strong at the time, investors will probably pull their investments. a little.”
Palantir Tchnl-A was trading higher on Tuesday afternoon at $17.02. The 70 and 200 period moving averages surround the latest candles, the RSI is up 52 points and the MACD lines are below the zero level.