Palantir (NYSE:PLTR), a former meme stock, has made a surprising comeback, with its stock up 5% today. The artificial intelligence (AI) enabled big data company’s shares are surging to highs not seen since late 2021.
Late 2021 was a period of fallout for many high-risk, long-duration assets due to interest rate hikes and weaker growth outlooks. This led investors to seek shelter in more defensive assets, resulting in most meme stocks taking a hit. Some have seen a modest recovery in 2023, with Palantir’s recent upside momentum being particularly noteworthy.
Interestingly, today’s surge in Palantir’s stock comes without any specific company news, leaving many investors puzzled.
The market has shown ultra-bullish enthusiasm for many AI-related stocks, with Nvidia (NASDAQ:NVDA) being a prime example. The company is set to report earnings tomorrow, and its stock is nearing its previous all-time high.
Investors are optimistic about the potential impact of AI monetization on companies’ balance sheets. The earnings outlook for this season is overwhelmingly positive for firms like Nvidia and Palantir, which generate a significant portion of their revenue from monetizing the AI trend. This is largely due to these companies’ impressive earnings performance in recent quarters.
However, it’s important to note that companies like Palantir and Nvidia are now trading at multiples that reflect this enthusiasm. Therefore, anything less than a stellar performance on these upcoming earnings reports could lead to a near-term giveback.
Despite this, the market is clearly favoring Palantir at the moment, which is good news for meme stock investors and momentum players.
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