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- 🗞️ Is Palantir Overvalued?
🗞️ Is Palantir Overvalued?
PLUS: Why is Applied Materials Falling
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Market Performance
S&P 500: 6,449.80 (⬇️ 0.29% )
Nasdaq: 21,622.98 (⬇️ 0.40%)
Dow Jones: 44,946.12 (⬆️ 0.08%)
Palantir’s Valuation is Sky-High
Palantir Technologies' (PLTR) meteoric rise is pushing the company's valuation into uncharted territory, forcing bullish investors to bank on increasingly robust future growth to justify its current levels.
Trading at 245 times forward earnings, Palantir has become the most richly valued company in the S&P 500 Index, making even Nvidia's 35x multiple look modest by comparison.
The defense and AI stock has surged nearly 150% this year, underpinned by growing artificial intelligence adoption and strong government ties. But this rally has created what analysts call "a difficult valuation story to sell."
Bloomberg Intelligence estimates Palantir would need to generate $60 billion over the next 12 months to trade at comparable valuations to peers, much higher than the $4 billion in revenues Wall Street expects for fiscal 2025.
We can see that PLTR stock has a Ziggma score of 79, but ranks in the bottom percentile in terms of valuation.
Our Takeaway
While Palantir's growth story remains compelling, its extremely lofty valuation creates significant downside risk if execution falters.
It joins a select group of hyper-growth stocks where investors must "squint their eyes" and believe in audacious growth targets.
With more than twice as many analysts rating it sell/hold versus buy, Palantir represents the classic momentum versus fundamentals debate that defines today's AI-driven market.
Big investors are buying this “unlisted” stock
When the founder who sold his last company to Zillow for $120M starts a new venture, people notice. That’s why the same VCs who backed Uber, Venmo, and eBay also invested in Pacaso.
Disrupting the real estate industry once again, Pacaso’s streamlined platform offers co-ownership of premier properties, revamping the $1.3T vacation home market.
And it works. By handing keys to 2,000+ happy homeowners, Pacaso has already made $110M+ in gross profits in their operating history.
Now, after 41% YoY gross profit growth last year alone, they recently reserved the Nasdaq ticker PCSO.
Paid advertisement for Pacaso’s Regulation A offering. Read the offering circular at invest.pacaso.com. Reserving a ticker symbol is not a guarantee that the company will go public. Listing on the NASDAQ is subject to approvals.
Market Overview
The S&P 500 ended Friday near flat after hitting a record high, as investors took profits following a strong week.
Consumer sentiment also weighed on markets, with the University of Michigan index falling to 58.6 in August from 61.7 last month due to inflation worries.
Despite Friday's pullback, major averages posted solid weekly gains. The Dow outperformed with a 1.74% weekly advance, while the S&P 500 and Nasdaq gained 0.94% and 0.81% respectively.
The strength came from cooler inflation data that raised hopes for a Federal Reserve rate cut next month.
July retail sales data also painted a healthy picture, rising 0.5% and meeting expectations, suggesting consumer resilience despite tariff concerns.
Stock Moves Deciphered 📈
First Solar (FSLR) rallied 11% after the Treasury Department issued guidance on how renewable projects can qualify for tax credits under President Donald Trump’s One Big Beautiful Bill Act.
The One Big Beautiful Bill Act terminates the investment and production tax credits for solar and wind projects after 2027. But projects that start construction within 12 months of the legislation passing Congress can claim the credits beyond 2027.
UnitedHealth (UNH) surged 12% after Warren Buffett's Berkshire Hathaway revealed a new $1.6 billion stake comprising 5 million shares in the health insurer.
The move marks UnitedHealth's best day in five years and helped erase credibility concerns that have plagued the stock. Michael Burry and David Tepper also disclosed sizable stakes.
Intel (INTC) climbed 3%, adding to Thursday's 7% gain, after Bloomberg reported the Trump administration is in talks to buy a stake in the chipmaker.
The potential government investment would help Intel bolster its US manufacturing capacity amid efforts to reduce semiconductor dependence on foreign suppliers.
Headlines You Can't Miss
Spirit Airlines warned it could shut down very soon, reducing industry capacity and potentially boosting airline pricing power.
Bank of America continued selling its massive stake in the bank, with Berkshire dumping another 26.3 million shares in Q2.
Fox Corporation hit all-time highs, trading at levels not seen since its creation in the Disney acquisition aftermath.
Goldman Sachs reached record levels, touching all-time highs dating back to its 1999 IPO.
Consumer sentiment deteriorated in early August as inflation expectations rose to 4.9% at the one-year horizon.
Trending Stocks
Target Corporation (TGT) Bank of America downgraded Target to underperform from neutral, citing deteriorating long-term outlook as the retailer falls further behind peers.
The bank trimmed its price target, while Target also agreed to end its partnership with Ulta Beauty.
Analyst Quote🎤: Target’s long-term outlook is deteriorating as the company falls further behind its peers.
Applied Materials (AMAT) The semiconductor equipment maker plunged 14% after providing lighter-than-expected earnings and revenue outlooks for its current quarter.
Despite posting a fiscal third-quarter beat, the company's higher exposure to over-supplied mature node manufacturing and certain struggling customers is impacting performance.
CEO Quote🎤: “We are currently operating in a dynamic macroeconomic and policy environment, which is creating increased uncertainty and lower visibility in the near term, including for our China business.”
Cava Group (CAVA) The Mediterranean fast-casual chain is down 18% week-to-date, pacing for its worst week on record. Traders sent the stock lower after Cava lowered its annual same-store sales growth target for the first time, marking a significant disappointment for the previously high-flying restaurant stock.
CEO Quote🎤: “We recently opened our 400th restaurant, marking a meaningful milestone on our path to 1,000 restaurants by 2032, reinforcing the proven portability and underlying strength fueling our continued growth.”
What’s Next?
Key Events 👇
Few major earnings are expected this week as the Q2 season winds down.
Over 95% of S&P 500 companies have reported, with 78% beating expectations.
Fed officials continue speaking on their tour ahead of the September policy meeting.
Markets are pricing in a high probability of a rate cut next month.
Track upcoming news and earnings on your portfolio companies with Ziggma.
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